Chegg Inc (NYSE:CHGG) stock is plunging Tuesday as the company revealed that students are leaning more towards using Microsoft Corporation’s (NASDAQ:MSFT) AI-powered ChatGPT instead of its services. The subscription services revenues have dropped 3%, and its subscribers have gone down 5% as compared to last year.
In a statement, Chegg President and CEO Dan Rosensweig said, “As artificial intelligence technology continues to evolve at a rapid pace, we are embracing it aggressively and prioritizing our investments to meet this opportunity.”
Chegg Inc has lowered its guidance for the second quarter revenue, predicting it to be between $175 million and $178 million, as compared to analyst estimates of $193.64 million. The company also mentions that the subscription services revenues would be between $159 million and $162 million, as compared to $168.4 million in the first quarter.
The analyst Brent Thill from Jefferies Research downgraded Chegg Inc’s stock from Buy to Hold, and Arvind Ramnani from Piper Sandler maintained it at Neutral but lowered its price target from $17 to $11.
About Chegg Inc: Chegg Inc is an educational technology company based in the United States. It offers its students textbook rental, digital and physical content, online tutoring services, internships and scholarships through its website and mobile app. It also provides both students and teachers with tools for academic help and study success solutions.
About Dan Rosensweig: Dan is the Chief Executive Officer and President of Chegg Inc. Prior to this, Dan was the President of Yahoo Inc. and President and Chief Operating Officer of Guitar Hero. He is also the Co-Chairman of Crossover Technologies and a Board member of several companies. He is well-known across Silicon Valley for his vision and foresight on how technology can transform lives.
