Not long ago, Chegg’s business model of
renting textbooks was disrupting the way students acquired course materials and
how college stores did business. But times change and the company’s attempts to
change with the times has left some investors scratching their heads.
In an effort to keep pace with the market,
Chegg acquired the student platform Cramster, an online food-ordering service Campus
Special, and Zinch, an online service that tries to match a student with a
college. The purchase of Campus Special cost $17 million alone, and Chegg paid
$2 million in expenses during the first quarter with no revenue and a sales
cycle that doesn’t begin until July.
Since going public last fall, Chegg has
watched its stock price tumble from the initial offering of $12.50 per share to
less than $6. The company reported a net loss of $25.8 million in the first
quarter of 2014, despite a 66% increase in digital revenue to $17.8 million.
"Everything we do is designed to solve the
pain points students have,” said Chegg CEO Dan Rosensweig in an interview with BuzzFeed. But he did admit that investors “may not understand our business
right now.”
