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Chegg disappoints Wall Street in IPO debut

Chegg's IPO falls more than 20 percent, as tech stocks are closely watched after last week's Twitter's IPO.
Posted By Sonali Basak   |   Nov. 13, 2013 at 3:11 PM
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Nov. 13 (UPI) -- Silicon Valley technology company Chegg's shares dipped extensively on its first day in public trading, but investors are optimistic about its future.

The company monitors students and finds better prices for educational resources, which is important as more books convert to be available on tablets.

The company is valued at $1.1 billion. Chegg shares fell to $9.98, down 20 percent from its initial price of $12.50. Earlier filings priced the company lower, at $9.50 to $11.50.

The company raised $187.5 million in its initial public offering.

Some were concerned that others, such as Amazon, would move into the e-textbook business and create significant competition for the rising company.

But Chegg uses technology to break into another industry -- the one-trillion dollar education industry.

"We can be a profitable business right now," said CEO Dan Rosenweig. But he said that Chegg is "investing for the future" and that the company's reach expanded dramatically in three and a half years from college markets to high school and college recruitment markets -- all together a trillion-dollar market opportunity.

U.S. technology and Internet companies have raised $6.9 billion in IPOs this year.

Chegg's IPO comes in the wake of Twitter's massive IPO last week. Twitter is a much larger company, valued at $25 billion. Its shares spiked far higher than its debut price.

Technology stocks Twitter and GoGo continued to rise in trading Wednesday. And Zulily, an online clothing retailer, also goes public later this week priced at $18 to $20 per share, targeting raising $230 million.

Chegg company was formed in 2005. It is listed on the New York Stock Exchange with the ticker CHGG.


[MarketWatch]
[Mercury News]
[DealBook]
[Bloomberg]

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