Galloway Capital Partners disclosed a 5.44% beneficial ownership of Chegg, Inc. (NYSE: CHGG) through a Schedule 13D filed on April 8 2026. The stake, comprising 6,093,000 common shares and call options, represents the largest single shareholder position in the company and signals a potential shift in governance and strategy.
The investment follows a period of share purchases that began in July 2025 and continued through April 2026. Galloway’s filing states that it believes Chegg’s share price is materially undervalued and that the market is pricing the company as if it were in financial distress, a view that contrasts with Chegg’s own outlook on its transition to a workforce‑skilling business.
Chegg’s recent financial performance has been mixed. In Q4 2025, the company reported total net revenue of $72.7 million, a 49% decline YoY, and a net loss of $32.8 million. The decline was driven by a 30% drop in legacy Academic Services revenue, which fell to $55 million, while the newer Chegg Skilling segment grew 11% to $17.7 million, reflecting early traction in the high‑growth skilling market.
Management has emphasized that the skilling business will become the primary growth engine, while legacy services will be managed for cash flow. CEO Nathan Schultz noted that trends impacting the business will worsen before they improve, underscoring the need for continued cost alignment. The company’s gross margin has remained in the 57‑60% range, indicating that pricing power in the skilling segment offsets margin pressure from the legacy business.
Galloway’s activist stance is expected to prompt constructive engagement with Chegg’s board and management. The firm has indicated it will seek to influence capital allocation, strategic direction, and potential separation of the skilling and legacy units to unlock shareholder value. Market reaction to the filing has been positive, with analysts noting the potential for improved governance and a clearer path to value creation.
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