Chegg Inc, a Santa Clara-based connected learning platform, announced that it has entered into an accelerated share repurchase agreement (ASR) with JP Morgan Chase Bank, National Association to repurchase $150 million of its stock.
The announcement comes about two weeks after Chegg’s stock came under pressure following its latest quarterly earnings, which fell more than 20% on a below-consensus outlook for 2023, and amid investor concerns about the impact of artificial intelligence (AI) tools such as ChatGPT on the education platform.
In a statement, Chegg said per the ASR it will make an initial payment of $150 million to JP Morgan Chase Bank, National Association, and will receive an initial delivery of approximately 7.6 million shares of its stock by February 24, 2023.
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The final number of shares to be repurchased will be based on the volume-weighted average price of Chegg’s common stock during the term of the ASR, less a discount, the company noted, with the final settlement of the ASR expected to occur by the second quarter of 2023.
“This accelerated share repurchase is further evidence of our commitment to enhancing shareholder value and demonstrates the strength of our financial model and our ability to generate significant free cash flow,” commented Chegg CEO Dan Rosensweig.
“We are excited about the opportunities before us and believe Chegg is best positioned to leverage advancements in technology along with our proprietary content, data, and expertise to help shape the rapidly evolving education landscape.”
Chegg stock had added 1.1%, trading at US$15.97 in pre-market trading on Friday morning.
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