Chegg, Inc. — financial distress indicators
Financial-health summary
Chegg, Inc.'s reported numbers place it in the 'Watch' financial-health band (distress score 38/100). The main indicators are revenue collapse, losses in 2 of the last 3 years and trading below $1.
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
Revenue changed -39% year over year.
A >30% sales drop typically breaches leverage covenants and starves fixed-cost coverage.
Recurring net losses.
Repeated losses are a core input in both Ohlson and Altman failure models.
Last price $0.74.
Below the $1 minimum-bid listing standard (Nasdaq Rule 5550(a)(2) / NYSE 802.01C); sustained breach leads to delisting and loss of capital-market access.
Operating margin fell from -9% to -31% in two years.
Sharp margin compression signals loss of pricing power or cost control.
Revenue declined every year for three years.
Structural, not cyclical, decline.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- No material mitigating factors found in the available data.
📰 Recent news scan
- Chegg Reports Q2 2026 Results: Full Earnings Call Transcript - BenzingaGoogle News · 2026-10-07
- 1 Volatile Stock for Long-Term Investors and 2 Facing Headwinds - StockStoryGoogle News · 2026-10-05
- Chegg (NYSE:CHGG) Stock Crosses Below 200-Day Moving Average - Here's Why - MarketBeatGoogle News · 2026-10-01
- A: Agilent Technologies Inc. Latest Stock Price, Analysis, News and Trading Ideas - StocktwitsGoogle News · 2026-09-30
- Powerlaw's first SpaceX share sale netted about $19 million for dividends and new investments. - Stock TitanGoogle News · 2026-09-23
- $CHGG stock is up 13% today. Here's what we see in our data. - Quiver QuantitativeGoogle News · 2026-05-20
⚖️ U.S. legal pathway — Title 11, U.S. Code
Which chapter would apply?
- Chapter 11 — reorganisation. Management usually stays in control as debtor-in-possession; the automatic stay (§362) halts collection; a plan must meet the best-interests test (§1129(a)(7)) and the absolute priority rule (§1129(b)) — creditors are paid before shareholders, who are frequently wiped out.
- Chapter 7 — liquidation. A trustee sells assets and distributes proceeds by statutory priority (§§507, 726).
- Subchapter V (“Chapter 5”) is a fast track for small-business debtors under a statutory debt cap, but SEC-reporting companies are excluded (§101(51D)) — so it rarely applies to listed companies.
What typically triggers a filing
- Payment default or covenant breach lenders will not waive; a debt maturity that cannot be refinanced.
- Auditor going-concern doubt (ASC 205-40 / PCAOB AS 2415) — often itself a default trigger in loan agreements.
- Creditors can force a case with an involuntary petition (§303) if debts are not paid as they come due.
- Delisting after sustained sub-$1 prices or equity deficits cuts off equity funding.
Transactions shortly before filing can be clawed back (preferences — 90 days, §547; fraudulent transfers — 2 years, §548).
Frequently asked questions
What do Chegg, Inc.'s financial-health indicators show?
As of 2026-10-08, Chegg, Inc.'s public financial data places it in the 'Watch' band with a distress score of 38/100, driven by revenue collapse, losses in 2 of the last 3 years and trading below $1. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is Chegg, Inc.'s financial distress score?
38/100 ('Watch').
What works in Chegg, Inc.'s favour?
No material mitigating factors were found in the available data.
How are shareholders treated if a company enters insolvency?
In a Chapter 11 reorganisation the absolute priority rule pays secured lenders, then unsecured creditors, before shareholders — so existing shares are usually cancelled or heavily diluted. In Chapter 7 the company is liquidated and shareholders rarely recover anything.
Other Consumer Staples companies with distress indicators
- AMASS Brands, Inc. (AMSS)Very weak 100/100
- Borealis Foods Inc. (BRLS)Very weak 100/100
- Reed's, Inc. (REED)Very weak 100/100
- Sadot Group Inc. (SDOT)Very weak 100/100
- Rocky Mountain Chocolate Factory, Inc. (RMCF)Very weak 97/100
- Sow Good Inc. (SOWG)Very weak 97/100
Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.