Chegg (NYSE: CHGG) has pulled off what an endless number of failed or failing companies could not: a successful pivot. Its original business model of renting high-priced textbooks to college students, a noble endeavor in attempting to overcome a particular extortion every alum reading this will have experienced, was a low margin, logistics-heavy one. Its services-driven model is a whole different ball-game. With gross margins of 72% for its most recent quarter, its subscription-based educational support platform lends itself to fast, scalable growth. Does its new business model make Chegg stock a good buy?

It's important to note that Chegg still provides the textbook-rental service, known as Required Materials, but now it acts as an intermediary, providing the platform for students to find books and charging a commission on rentals instead of renting out the books themselves. It still provides about 19% of net revenues, yet takes a back seat to Chegg Services, which comprises of a homework assistance service, writing tools, a step-by-step math problem solver, 24/7 tutor support and recent acquisition Thinkful, a collection of skill-based courses.

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The bull case for Chegg

Let's look at some of the highlights which make Chegg stock a good buy:

• 87% brand recognition amongst U.S. college students.

• Chegg has indicated a pool of 102 million students as its market opportunity, of which they currently claim 6.6 million as subscribers.

• Revenue is growing at 57% year-over-year.

• Subscribers are growing at 67% year-over-year.

• 57% year-on-year revenue growth in Chegg Services.

• Strong customer feedback: 92% of subscribers say it helped them get better grades.

So we've got a strong brand, trending upward with promising growth figures, loved by its customers, and it's only tapped into 6% of its potential market. Oh, and did I mention Chegg is also eyeing up international expansion into Canada, Australia, and the United Kingdom? Couple this with a leadership team that has successfully managed the business through a significant change in business model and we are really on to a winner here.

But before you rush to your broker like you've found the next Amazon (NASDAQ: AMZN) or Apple (NASDAQ: AAPL), cool your jets for a second and let's look at potential risks involved in investing in Chegg.  

The bear case against Chegg

There is one main caveat that holds Chegg back from being perceived by investors as a true disrupting, growth-stock: the lifetime value of its customers. Customer lifetime value is the total amount of money a customer will spend on your products through the course of their lifetime. It is a very important metric to look at because it highlights some of the things we as investors love to see in a business: a sticky-business model, retention rates, and pricing power, amongst others.

Chegg is facing a fundamental issue here in that its customers are very finite. While a company like Microsoft (NASDAQ: MSFT) could have a number of Office 365 subscribers for the next 30 years, the longest Chegg will keep a customer is the duration of their degree. This cyclical customer churn will be a perennial factor in its continued subscriber growth. However, with the brand recognition it has amongst U.S. students, as well as plans to expand internationally, the acquisition of new members needed to maintain and grow its subscriber base should be well within its reach.  

So, is Chegg stock a buy?

I'm bullish on this stock and see it as a long-term buy and hold. Its recent performance, ability to pivot, strong management team, and powerful brand tick all the boxes in my book. The cyclical nature of its customer base means it's not going to be able to grow its subscribers as some blitzscaling growth stocks like Shopify (NYSE:SHOP) or Roku (NASDAQ:ROKU) can, but I feel it can deliver strong returns over the next decade.    

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