The Beginning of the End of Chegg?
Plus, educators endorse cheating company. Plus, plagiarizing President will keep his job.
Issue 68
Cheating Company Chegg Misses Revenue, Stockholders Flee, Value Plummets
Cheating company Chegg, which is traded on the New York Stock Exchange, told investors on Monday that it would not meet its upcoming revenue targets. The stock lost as much as 40% of its value overnight and today. The stock has lost more than two-thirds of its value since its high in February.
This cratering was expected as Chegg has long-term problems (see Issue 63).
But the curious thing about this recent crash is what the company’s leadership said. According to news reports, Chegg’s CEO blamed their weak performance on declining enrollment and other factors, including a downturn in “graded assignments.” His written statement said, in part:
A combination of variants, increased employment opportunities, and compensation, along with fatigue, have all led to significantly fewer enrollments than expected this semester. And those students who have enrolled are taking fewer and less rigorous classes and are receiving less graded assignments.
The CEO of this “education company” means fewer graded assignments, not less.
But what he’s really saying without saying it is that fewer graded tests, especially fewer graded online tests, means fewer students willing to pay Chegg for the answers.
And, while we’re here, blaming “fewer enrollments” is pure nonsense. Even the stock and market publications called out this fib.
According to the most recent statistics, enrollments nationwide are down about 3.2% this fall. That’s a smaller decline than we saw in fall, 2020 - down 3.4% - when Chegg revenue and stock prices were surging.
If the enrollment declines are about the same year over year - 3.2 versus 3.4 - what could account for Chegg’s revenue drought? Maybe the difference is that last fall nearly all classes, assignments and tests were online - where we know cheating is easier and more common. This year, there are fewer such online-only, unsupervised cheating opportunities. And that’s crimping Chegg’s profit.
Moreover, in the intervening year, some instructors got wise to Chegg cheating. Some students were busted and warnings about being caught using Chegg spread like wildfire on social media and student message boards. That’s also hurting.
And that’s not even mentioning the legal challenge that could obliterate Chegg’s entire business model of selling answers to other people’s questions (see Issue 57).
Bottom line: Chegg as a business is in trouble. And while the stock will probably rebound somewhat, the problem is the business itself - it can only thrive in spaces where cheating flourishes.
We didn’t see it happening and it happened
That’s the Chegg CEO again.
On the contrary though, this was not only predicted, it was expected. Online classes were not going to continue to be universal. And people were catching on that Chegg’s core service is cheating, selling answers to test and homework questions. None of this is a surprise to anyone, except Chegg and its investors.
Analysis: Chegg Stock is “Buy” - Oops
In the last issue of “The Cheat Sheet” last week, we teased a blurb on a stock prediction on cheating company Chegg:
As their stock tanks, a stock trader defends cheating company Chegg - kind of.
I mention this only to say we’re not visiting this stock prediction because of today’s price collapse - we’d planned it last week.
So, that advice on Chegg stock is from an investor who told readers “Buy This Industry Leader.” Pretty bad timing.
But bad investment advice is not the subject. What’s noteworthy about the article is that, in defending Chegg, the investor more or less gives their game away - exposing Chegg for the shameless answer-seller that it is:
Chegg advertises over 32 million solutions from 9000 textbooks as well as a Q&A platform answered by experts. Chegg's colossal library and SEO optimization give the idea to students that Chegg is the only platform to get answers consistently.
Of Chegg’s largest product, the Potemkin-branded “Chegg Study,” the investor writes:
Chegg Study provides students with on-demand Q&As from experts, textbook solutions, and exam practice problems. As a company founded in 2005, Chegg has a vast library that it can leverage from. They also have over 70,000 educated experts in India who, according to Chegg, answer questions live in an average of 46 minutes
For someone advocating Chegg’s business, the writer correctly uses “answers” and “solutions” pretty frequently. And that’s right - selling answers is what Chegg does.
The piece gets credit for mentioning Chegg’s “cheating controversies” and the “Pearson Lawsuit.” And it gets real credit for mentioning a few of Chegg’s “competitors” in the cheating game: Course Hero, Quizlet and Bartleby, which it says is:
a service launched recently by Barnes and Noble that mirrors almost everything Chegg does
Professors, Academics Endorse Chegg
Speaking of bad timing, cheating company Chegg announced a number of teachers and other education folks joined something called an “academic advisory board.”
According to the release, offering advice and credibility to the cheating company are:
Dr. Paul J. LeBlanc, President of Southern New Hampshire University
Dr. Ann Kirschner, The City University of New York
Dr. Paul Kim, Graduate School of Education at Stanford University
Dr. Dana Born, Harvard Kennedy School of Government
The release does not mention whether they are compensated by Chegg, though at least one is. Not mentioned in the release, LeBlanc is a member of Chegg’s Board of Directors and has received shares in the company. In the release, LeBlanc said,
I am honored to join my colleagues on this important endeavor.
Plagiarizing College President Will Stay in Job
In Issue 60, we noted that:
W. Franklin Evans, President of West Liberty University, a public university in West Virginia, has plagiarized public remarks multiple times since he became President earlier this year.
That blurb also noted that President Evans was likely to keep his job anyway. And he has, according to news reports:
A two-vote margin Wednesday among the 12 representatives on West Liberty University’s Board of Governors will keep President W. Franklin Evans at the university’s helm.
The conversation may not be over, though. Jason Metz, a Board member representing faculty at the school said,
[students] are asking our leaders how we intend to enforce academic honesty in our students, and our leaders don’t have an answer to that, unfortunately. Some faculty have reported struggling to enforce our student code of conduct related to plagiarism, because they are citing a double standard on campus.
I imagine so.
Days after the Board voted to retain Evans, the faculty Senate voted “no confidence” in him, by a 14-1 margin.
New, Notes and Noteworthy
The International Center for Academic Integrity (ICAI) is asking for nominations to its Board of Directors. Applications and inquires are due by November 7.
I did not intend to make this Issue entirely - or mostly - about Chegg. But the news today, this week is Chegg.
In the next “The Cheat Sheet,” as promised, we’ll view that story on alternatives to essay mills. Plus, Ed Scoop gives space to exam proctoring. Plus, other coverage of cheating. Thank you for sharing and subscribing to “The Cheat Sheet.”