Chegg Prices IPO at $12.50 Per Share, Above Initial Range
November 12, 2013
By Michael J. De La Merced
NYTIMES – Chegg, a start-up focused on textbook rentals and academic services, priced its initial public offering on Tuesday at $12.50 a share, exceeding expectations.
At that price, the eight-year-old company will have raised $187.5 million. The I.P.O. will also value Chegg at nearly $1.1 billion.
It will begin trading on the New York Stock Exchange under the ticker symbol CHGG.
Chegg is the one of the first Silicon Valley companies to go public in the wake of Twitter‘s market debut last week, a closely watched event whose success has spurred many deal makers to consider the next big tech I.P.O.
Formally founded in 2005, Chegg focuses primarily on renting textbooks for a semester at a time, with 180,000 titles in its catalog. But the company is building out its electronic services, which it sees as its future. It offers more than 100,000 electronic textbooks and has rolled out offerings like helping high school students find colleges and scholarships.
In the prospectus, the company says it now reaches about 30 percent of all college students in the country and 40 percent of college-bound high school seniors.
Chegg said it earned $22.7 million in adjusted earnings before interest, taxes, depreciation and amortization, or Ebitda, for the nine months ended Sept. 30, a metric that excludes certain costs like stock-based compensation. That is up nearly fourfold from results in the period a year earlier.
Using generally accepted accounting principles, the company’s loss narrowed 12 percent, to $50.4 million.
Still, a number of big players are betting that Chegg’s future will be bright. Among its stockholders are Kleiner Perkins Caufield & Byers and Insight Venture Partners.
Most of those investors aren’t selling their shares, and the bulk of the I.P.O.’s proceeds will go toward building out the company. But Aayush Phumbhra, one of Chegg’s co-founders, will pare down his stake by about 23 percent, to nearly 2 million shares.
Chegg’s offering was led by JPMorgan Chase and Bank of America.