Chegg Inc., one of the leading homework-help companies, endured a massive decline in share prices as a result of the threat from OpenAI’s tool, ChatGPT. The software surged in popularity last year, and since March of this year, there has been a clear impact on the company’s new customer growth rate. Chegg makes much of its money from monthly subscriptions starting at $15.95, a service which could be at risk if students replace it with the AI chatbot alternative.
The company reported disappointing and gloomy forecasts for the current quarter, sending the stock plummeting as much as 38% in extended trading, and Morgan Stanley analysts downgraded their forecasts and highlighted the risk of generative AI. Not only did this shock the market, but CEO Dan Rosensweig himself noted this ominous sign of the times, citing the impact of the software on the company’s growth.
Despite the cheery notes offered by Rosensweig emphasizing the embrace of AI, the result was still a significant sell-off. Retention rates are still high, but it seems the sunny forecast of utilizing generative AI has been overshadowed by the potential threat it has created.
Chegg Inc. is a publicly traded American educational technology and textbook rental company headquartered in Santa Clara, California. Founded in 2005, Chegg connects students to the resources, tools, and services they need to succeed in over 6,000 universities, including discounts on textbooks. CEO Dan Rosensweig has held the position since 2018, and prior to Chegg he has served as the CEO of Activision Blizzard and Yahoo! among other successful ventures.
