Chegg Chucks Textbooks Business, Goes All-In on Digital
CHEGG CHUCKS TEXTBOOKS: Chegg, which got its start in 2001 by helping students rent physical textbooks, is leaving its old business behind as it goes all-in on digital tools. The company has reached a multi-year agreement to allow Ingram Content Group, a major book distributor, to take over its textbook rental operations starting May 1, 2015. Students will still be able to rent textbooks from Chegg, which will take a 20% commission from each rental, according to Fast Company.
Even though print textbooks raked in $213 million in revenues for Chegg last year, maintaining these operations has been costly. The company's net loss increased from $55.8 million in 2013 to $64.7 million last year. Since debuting on the public market at $9 a share in November 2013, shares of the company have hovered below $7 for most of 2014.
"For our shareholders, this is very positive news as it means Chegg will no longer invest our capital in physical textbooks," said CEO Dan Rosenweig in a press release. The New York Times reports that this deal with Ingram "will free an estimated $25 million of capital to start."
Investors seem pretty happy at the moment: at the close of Tuesday, Feb. 24, Chegg shares jumped 27% from the previous day, when the announcement was made.