A lawsuit filed last month in the Federal District Court argues that the Chegg education technology company, Chegg, deceived investors by not making clear the growth of the company was a temporary effect of migration of courses Online in response to the pandemic and was "largely due to the facilitation of deception, an unstable business proposal, instead of the strength of its business model or the insight of its senior executives and directors."
The suit along with a burst of advertisements of the law firms that announce investigations of possible violations of the federal securities laws by Chegg and requesting potential plaintiffs, come after the price of Chegg's shares fell approximately half of the release of their third-quarter earnings on November 1.
Among other services, Chegg offers an online service based on subscribers through which students can present specific questions and receive answers 24 hours a day from an "expert". Many academic integrities and experts in higher education are concerned about the extent that students are using the CHEGG request feature to deceive testing or other tasks. A study published in the International Journal for Educational Integrity last year found that the number of questions presented to Chegg increased dramatically in the following months at the beginning of the pandemic: an increase of the authors of the study linked to a likely increase to deceive between Students who study remotely.
more popular
The lawsuit, presented as a class action in the US District Court UU For the Northern District of California, it alleges that the company's executives cheated investors about the reasons and potential sustainability of, the rapid CHEGG GROWTH. The net income of Chegg increased by approximately 57 percent since fiscal year 2019 to fiscal year 2020, and its number of subscribers increased by 67 percent.
"The statements of the company that surround its exponential increase in subscribers, income and earnings in 2020, which checked Chegg, was due to the strength of its business model and business vision of The company's leaders, was false and deceptive, "the states of demand. "Actually, as students took more courses and virtual tests remotely with less supervision, students discovered that they had open access to Chegg 24/7 service applications, even to complete their task, testing, tasks of Scripture and even dissertations and exams ".
The lawsuit affirms that "Once the restrictions related to the pandemic decreased and the students returned to the campuses throughout the country and the schools and universities implemented the protocols to eliminate deception, students carefully left If you subscribe to the platform. In summary, Chegg had no basis for believing that extraordinary, but temporary, growth trends would continue, but failed to adequately inform investors from that reality. " googleg.cmd.push (function () googleg.display ("dfp-ad-article_in_article"););
Chegg actions derived by approximately 50 percent, from approximately $ 63 to $ 32 per share, within a day after the company announced a decrease in its third quarter revenues compared to the previous quarter.
Chegg subscriber drops. 4.9 million in the second quarter of 2021 to 4.4 million in the third quarter. However, general subscriptions increased by 17 percent year throughout the year.
CEO of Joy Dan Rosensweig characterized the deceleration as temporary and attributable to declines in university registrations combined with rigor decreases during a winnings of November 1, November 1 with investors. .
Related stories
