Chegg, a popular textbook rental and educational service provider, experienced a sudden dip of 48% in their stock price on Tuesday. This was in response to the company’s comments during their earnings report about the potential risks of Artificial Intelligence (AI). However, company CEO Dan Rosensweig quickly downplayed the significance of the drop and commented on CNBC that it was “extraordinarily overblown.”
The company emphasized that the guidance for the upcoming quarter was only provided for the short-term as it was “too early to tell how this will play out”. The CEO highlighted that Chegg was still capable of substantial free cash flow and earnings on an adjusted basis, as well as having enough cash to pay off the debt. Chegg also reported higher than expected earnings and revenue for the first quarter.
The recent focus has shifted to the newly popular ChatGPT, a chatbot created by OpenAI. Rosensweig had mentioned that this would be an influencing factor as it affected new customer growth rate. In order to combat the ‘hallucination’ phenomenon (where false answers are produced), Rosensweig mentioned that the upcoming Cheggmate platform which combines GPT and Chegg’s data may prove to be transformative.
Chegg, founded in 2005, is primarily known for developing a textbook rental model for college students. However, the company has since expanded its operations to include homework and exam help products. The company is set to launch Cheggmate, its GPT-4 powered AI platform, in May.
Dan Rosenweig is an experienced CEO who currently holds his position at Chegg. Prior to this, he worked in several executive roles at Yahoo and other tech giants. He has an expertise in the areas of strategy, marketing, and product development. He is known for his unrivalled knowledge in technology and believes that Chegg’s platform will be able to generate accurate answers and beneficial outcomes for students.
