CHGG vs. DUOL: Which EdTech Stock Is the Better Buy Right Now?

Chegg (CHGG) is executing a major restructuring, including a 45% workforce reduction and a strategic pivot to its Busuu and Skills segments, after its core academic subscription services declined 40% in Q2 2025 due to AI disruption, leading to a 36% revenue drop. Conversely, Duolingo (DUOL) demonstrated robust growth in Q2 2025, with revenue up 41% to $252.3 million, daily active users increasing 40%, and strong EBITDA margins, driven by successful product expansion and monetization. While Chegg represents a high-risk turnaround play with a significantly lower valuation, Duolingo is positioned as a strong growth compounder with superior financial performance and analyst sentiment, making it the preferred long-term investment.

Analysis

Chegg (CHGG) is undergoing a significant transformation following a 40% year-over-year decline in Q2 2025 subscriptions and a 36% drop in total revenues to $105 million, primarily due to AI disruption from Google AI Overviews. The company is implementing a 45% workforce reduction to achieve $100-110 million in non-GAAP expense savings by 2026 and pivoting towards its Busuu language learning subsidiary, which grew revenue by 15%, and its Skills platform, targeting a $40 billion market with 16% quarter-over-quarter enrollment growth. Despite exceeding Q2 guidance with $23 million in adjusted EBITDA at a 22% margin, reflecting strong cost control, Chegg's market capitalization of $113.7 million and 0.32x forward sales multiple indicate deep investor pessimism. Analysts forecast a 36.7% revenue decline in 2025 and a projected loss per share of 11 cents, underscoring the high-risk nature of its turnaround strategy.

In stark contrast, Duolingo (DUOL) continues to exhibit robust growth and operational excellence, with Q2 2025 revenue surging 41% to $252.3 million. Daily active users increased 40% to 47.7 million, and paid subscribers grew 37% to 10.9 million, driving an 84% rise in net income and a 31.2% adjusted EBITDA margin. Duolingo's success is fueled by strong user engagement, continuous product innovation, and expansion into new educational verticals, such as its Chess course which has surpassed one million daily active users.

Duolingo's financial guidance remains strong, with bookings growth expected to exceed 32% for full-year 2025 and continued profitability improvements. The company commands a $12.5 billion valuation, trading at 10.09x forward sales, reflecting investor confidence in its durable subscription growth and margin scalability. Analyst estimates project a 68.1% EPS improvement in 2025 and 36.2% revenue growth, positioning Duolingo as a high-visibility growth compounder with a Zacks Rank #2 (Buy).

Key Decisions for Investors

• Investors should consider Duolingo (DUOL) as a core long-term growth holding due to its consistent user and revenue expansion, strong profitability, and favorable analyst outlook.
• For Chegg (CHGG), investors should approach with caution, viewing it as a high-risk turnaround play; monitor the execution of its restructuring plan, particularly the revenue contribution from Busuu and Skills, and the impact of the new CEO.
• Evaluate Chegg's ability to stabilize its core academic business and achieve its expense reduction targets, as its current valuation prices in significant pessimism but offers potential upside if the strategic pivot succeeds.