Will insiders be tempted to buy more CHGG at the new 52 week low?

IIn Tuesday’s trading, shares of Chegg Inc (Symbol: CHGG) touched a new 52-week low of $15.66/share. This is a decline in the share price of $75.86, a decline of -82.89% from the 52-week high of $91.52 recorded on 05/03/2021. Large percentage declines still require the stock to post even larger percentage gains from the low in order to reclaim the old price level, and for CHGG this means the stock would need to gain 484.42% to return to the 52-week high. For a move like that, Chegg Inc would need fundamental strength at the enterprise level.

Here’s a rhetorical question: Who knows more about company-level fundamentals than company insiders? So let’s take a look to see if any company insiders took the other side of the trade as CHGG shares sold off at this new 52-week low, focusing on the last six-month period. . As summarized in the table below, CHGG has seen 3 different instances of insider buying over the past six months.

01/12/2021Daniel RosensweigPRESIDENT, CEO & CO-PRESIDENT25,000$28.52$712,907.56
02/12/2021Ted SchleinDirector35,470$28.54$1,012,313.80
01/12/2021Andrew J. BrownFINANCIAL DIRECTOR20,000$28.19$563,800.00

In the short term, while the new 52-week low suggests the stock is at the cheapest price and therefore possibly the best deal it has been in the past 52 weeks, the weak print also means that anyone bought the stock during this period is facing an unrealized loss. Often this factor determines a stock’s technical analysis parameters by creating general resistance, with investors who bought higher now eager to reverse their trade once they break even. The chart below shows where CHGG has traded over the past year, with the 50 and 200 day moving averages included.

Time will tell if insider buying predicts a future rebound for CHGG shares, which are currently posting a final trade of $17.57/share, a rebound of 12.20% from the new 52-week low.

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