Chegg, an education technology provider, saw its stock price plunge as much as 49% on Tuesday after the company commented on the rise of ChatGPT and its impact on customer growth. Despite delivering first-quarter earnings that beat analysts’ estimates, investors were rattled by the fear that OpenAI’s ChatGPT could be a viable threat to Chegg. CEO Dan Rosensweig noted during the earnings call that there had been a “significant spike in student interest in ChatGPT” since March when the newly upgraded ChatGPT 4 tool was released.
However, the education company is taking steps to combat the surge in ChatGPT usage, notably with its introduction of CheggMate, a browser-based chatbot that helps students with their studies and homework. CheggMate is built with OpenAI’s ChatGPT and the platform is expected to give students an updated and improved experience in comparison to the one offered by the competition.
Looking ahead, Chegg has removed its guidance for 2023, but the company is optimistic that Fall enrollment trends should help to appease investor concerns. JPMorgan reiterated that sentiment in a note released Tuesday in which it praised the company’s investment in CheggMate, but maintained a “Neutral” rating with a $14 price target.
Ultimately, the key figure in this article is Dan Rosensweig who serves as the CEO of Chegg. He has held this position since 2018 and has helped the company make important decisions that put it ahead of its competition. Rosensweig also had the initiative to launch CheggMate in an effort to distance the company from its competitors. With this move, Chegg is hoping to provide a valuable service to its customers and strengthen its presence in the market.
