Is Chegg, Inc. overvalued or undervalued?

As of 5 August 2024, Chegg, Inc. has moved from a fair to a risky valuation grade, indicating a significant deterioration in its financial outlook. The company is currently considered overvalued, primarily due to its negative earnings and substantial losses reflected in key ratios. The P/E ratio is not applicable as the company is loss-making, while the Price to Book Value stands at 0.94, suggesting that the market values the company slightly below its book value. Additionally, the EV to EBITDA ratio is 3.27, which, while low, is overshadowed by the concerning EV to EBIT of -3.40, indicating operational inefficiencies.
In comparison to its peers, Chegg, Inc.'s valuation metrics are starkly unfavorable. OPENLANE, Inc. has a P/E of 21.56 and an EV to EBITDA of 10.51, while V2X, Inc. shows a P/E of 34.35 and an EV to EBITDA of 8.51, both reflecting healthier valuations. The company's return performance has also been dismal, with a one-year decline of 50.88%, compared to a 10.26% gain in the S&P 500, further reinforcing the notion that Chegg is overvalued in the current market environment.