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Textbook rental firm Chegg slumps in market debut

Wednesday, 13 Nov 2013 | 10:51 AM ET

Nov 13 (Reuters) - Shares of Chegg Inc, whose main business is renting textbooks, fell as much as 18 percent in their debut on Wednesday, a day after its initial public offering was priced above the planned range.

Chegg's IPO of 15 million shares was priced at $12.50 each, higher than the expected range of $9.50-$11.50.

The shares opened at $11.00 on the New York Stock Exchange, 12 percent below their IPO price. They fell to a low of $10.30 in heavy trading.

Chegg, whose name is derived from the chicken-and-egg conundrum, would have been valued at more than $1 billion at its IPO price.

The company rents textbooks from its library of nearly 180,000 titles, sourced from publishers including Pearson, McGraw Hill, Wiley and MacMillan.

Santa Clara, California-based Chegg was co-founded by Aayush Phumbhra while he was studying at Iowa State University.

Under CEO Dan Rosensweig, a former executive at Yahoo Inc , Chegg has built an online platform for homework note-sharing, class planning, finding professors and tutors, and even recruiting for athletics.

Launched nationally in 2007, Chegg has raised more than $200 million in venture funding and debt. Its investors include Insight Venture Partners, Foundation Capital, Gabriel Venture Partners and Kleiner Perkins Caufield & Byers.

JP Morgan and Merrill Lynch, Pierce, Fenner & Smith were the lead underwriters of the offering.

(Reporting by Aman Shah and Neha Dimri in Bangalore)