Upgrade from Sell to Hold on CHEG Amid Restructuring

3 months ago

Parkev Tatevosian

"I would not want to own this stock by any stretch of the imagination. But I no longer think it's an allout sell. I no longer think this is a situation where you need to avoid it at all cost. I think there's, you know, there's a chance that it can succeed and I can't confidently say that I think this stock price will be lower 12 months from now. Now, last year I was pretty confident and to start 2025 I was really confident that the share price would be lower. I no longer feel that way. I think they've cut enough of their expense and they've changed enough of their business model that they've got a chance to succeed and so I'm upgrading their stock to a hold up from a sell. So, this is still a business that's in a poor situation. I would not want to own this stock, but I also don't think that you need to dump it if you have it at this point. Hopefully, you never owned it to begin with, but if you have it right now, yeah, I would say it's a 50/50 chance whether it would be higher one year from now or lower one year from now."

The speaker explains that although CHEG has experienced significant declines and structural challenges due to competition from Chat GPT, management's cost-cutting and restructuring measures have led him to upgrade the rating from a sell to a hold. He cautions that he would not want to initiate a position in CHEG and views holding as a 50/50 play over the next 12 months.

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