Shares of two leading online education companies, Chegg and Coursera, took a significant hit this week, dropping by more than 10% following disappointing guidance. The decrease was attributed in part to the growing use of artificial intelligence tools like ChatGPT by students.
Chegg, which recently named a new CEO, projected second-quarter revenue to be in the range of $159 million to $161 million. This figure fell short of the $174 million estimate forecasted by analysts. Consequently, Jefferies downgraded Chegg’s stock rating to underperform from hold and adjusted its price target downward to $4 from $7, indicating a potential 2% decrease from the previous day’s closing price.
Analyst Brent Thill expressed skepticism about Chegg’s ability to sustain growth, particularly as free AI tools become more appealing alternatives to the paid services offered by Chegg. This shift in student preferences towards AI-driven resources may present challenges for the company in maintaining its subscriber base and revenue stream.
The decline in share value for both Chegg and Coursera underscores the significant impact that emerging technologies like artificial intelligence are having on the education sector. As students increasingly turn to AI tools for learning assistance, online education providers must adapt their strategies to remain competitive in this evolving landscape.
Frequently Asked Questions (FAQs) Related to the Above News
What caused the decrease in shares for Chegg and Coursera?
The decrease in shares for Chegg and Coursera was attributed in part to the growing use of artificial intelligence tools like ChatGPT by students.
What was Chegg's projected second-quarter revenue and how did it compare to analyst estimates?
Chegg projected second-quarter revenue to be in the range of $159 million to $161 million, falling short of the $174 million estimate forecasted by analysts.
How did Jefferies respond to Chegg's projected revenue and what actions did they take?
Jefferies downgraded Chegg's stock rating to underperform from hold and adjusted its price target downward to $4 from $7, indicating a potential 2% decrease from the previous day's closing price.
Why did analyst Brent Thill express skepticism about Chegg's growth prospects?
Brent Thill expressed skepticism about Chegg's ability to sustain growth due to the increasing popularity of free AI tools as alternatives to the paid services offered by Chegg.
What does the decline in share value for Chegg and Coursera indicate about the impact of artificial intelligence on the education sector?
The decline in share value for Chegg and Coursera highlights the significant impact that emerging technologies like artificial intelligence are having on the education sector, as students increasingly turn to AI tools for learning assistance.
Please note that the FAQs provided on this page are based on the news article published. While we strive to provide accurate and up-to-date information, it is always recommended to consult relevant authorities or professionals before making any decisions or taking action based on the FAQs or the news article.
