CHGG Stock Soars Following Galloway Capital’s Letter To Chegg CEO — What Did It Say?

• The investing group highlighted that the effective path to unlocking shareholder value would be for Chegg to undertake a strategic separation of its business units.
• Galloway Capital also disclosed that it has acquired a 5.44% stake in Chegg.
• The group stated that Chegg maintains a strong balance sheet and that it has no credible risk of financial distress.

Chegg Inc. (CHGG) shares soared more than 20% in Wednesday’s midday trade after the company disclosed a letter from one of its significant shareholders, Galloway Capital Partners.

According to the letter addressed to Chegg CEO Dan Rosensweig, Galloway Capital stated that CHGG’s current price reflects a “substantial disconnect” from intrinsic value.

“At present levels, the market appears to be incorrectly pricing the business as though it is in financial distress. The Company maintains a strong balance sheet, is expected to exit the year with net cash and no debt, and, in our view, has no credible risk of financial distress,” Galloway Capital stated in its letter.

Retail sentiment on Stocktwits around Chegg trended in the ‘bullish’ territory at the time of writing.

Galloway Capital Highlights Path To Unlocking Shareholder Value

The group highlighted that the effective path to unlocking shareholder value would be for Chegg to undertake a strategic separation of its business units.

Galloway Capital stated that Chegg’s Skilling segment is generating approximately $72 million in annualized revenue. The group noted that this unit has the potential to grow at a sustained double-digit rate, with an addressable market of about $40 billion.

“As a standalone business, we believe it would command a materially higher technology valuation multiple reflective of its growth profile,” Galloway Capital added.

It also noted that Chegg’s legacy Academic Services business could generate meaningful cash flow over the coming years, while this is not reflected in the company’s current valuation.

“We are encouraged by the Company’s efforts to align its cost structure and invest in areas of future demand, including AI-enabled learning and workforce development,” the group added.

Galloway Capital Discloses Stake In Chegg

Galloway Capital also disclosed that it has acquired a 5.44% stake in Chegg. Bruce Galloway, the group's Chief Investment Officer, stated that Chegg is materially undervalued. “With a more focused strategic structure and continued execution, we see a clear and actionable path to unlocking significant shareholder value,” he added.

Galloway Capital stated that it looks forward to engaging with Chegg’s management team and board to explore opportunities to enhance long-term shareholder value.

In February 2026, Chegg reported full-year 2025 revenue of $377 million, declining 39% over the prior period. Its net loss for the period was $103 million, compared with a net loss of $837 million in 2024.

CHGG stock is down 9% year-to-date, but up 73% over the past 12 months. The Vanguard Total Stock Market Index Fund ETF (VTI) is up 37% over the past 12 months, while the Vanguard Small-Cap Index Fund ETF (VB) is up 41%.

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