Chegg, a leader in the education technology industry, saw its stock dip in late trading Monday of May 17th, following the company’s announcement that the demand for their services had been hurt from students turning to OpenAi’s ChatGPT for homework help. Chegg reported higher than expected non-GAAP earnings for the March quarter; coming in at 27 cents a share and sales income of $187.6 million, beating their expected sales of $185.2 million. Despite this positives, the company’s stock took a hit, with shares dropping over 30% to $11.90 in post-market trading.
The company’s CEO Dan Rosensweig commented saying they had not seen an impact from ChatGPT until March of 2021, which explains their positive reports prior to this. He continued with saying the company has now prioritized investments in Artificial Intelligence, with Chegg last month releasing a AI learning service using the OpenAi’s GPT-4 framework. He believed they were in the best position to take advantage of AI solutions and have high expections to leverage their data from 150,000 plus experts and decade-plus experience into the CheggMate platform. Rosensweig noted their strong retention rates for existing users and a output for the second quarter of between $175 million and $178 million, however, no outlook was given for later quarters.
Chegg is a American online textbook rental company and educational technology firm that was founded back in 2005 by a group of 4 friends. It offers digital and physical textbook rentals, online tutoring, internships and the sale of college textbook buyback services. The company is based in Californa and has a staff of over 700 employees.
Dan Rosensweig is the Chief Executive Officer (CEO) and Executive Chairman of Chegg. He is an American businessman and currently holds the Director of Activision Blizzard Inc and Quanex Building Products Corporation. Rosensweig is known for his tenure as President and COO of Yahoo! and success achieved in pushing the company towards being one of the web’s most successful business entities. He joined Chegg in 2010 when the company was still in its early stages, and throughout the years actedCEO as both
In conclusion, Chegg saw its stocks dip in late trading on Monday due to student’s increasing use of OpenAI ChatGPT for homework help. Despite the warnings Dan Rosensweig, Chegg’s CEO and Executive Chairman, gave an optimistic outlook on the company’s new venture into Artificial Intelligence and how the company plans to leverage their data, employees and experience to provide best products and services to its customers.
