Chegg Inc., a leading U.S. education services provider, has seen a major drop in its market valuation with the emergence of a new ChatGPT tool for students. The free artificial intelligence (AI) tool is gaining traction among students and threatening the growth of Chegg’s core business.
CEO Dan Rosensweig provided a revenue warning, stating that due to the spike in student interest in ChatGPT, there is an impact on their new customer growth. As a response to the perceived threat, Chegg launched CheggMate, a tailored AI-powered studying assistant. Despite this, analysts remain unclear whether it is enough to counter the potential slowdown in the company’s core business.
Furthermore, Chegg announced they were suspending their outlook and expected total revenue to range between $175 million and $178 million, significantly lower than the Wall Street expectations of $186.3 million. Analysts believe that the company needs to take more proactive steps to keep up with the changing business environment.
Pearson PLC, a UK-based rival of Chegg, faced a plummet of 9% in its shares.
At the helm of Chegg is Dan Rosensweig, who has served as the CEO since 2018. He is a experienced executive and also currently serves as a board member of Activision Blizzard.
Chegg Inc. is a leading provider of digital educational services, offering interactive online tutoring, test-prep tools and courses. The online education company offers digital textbook rentals, online tutoring, digital teaching software and study tools for students and teachers worldwide. Chegg also provides college and career planning, including its “Path to College” which helps high school students prepare for college admissions.
