Chegg, an online education company, experienced a sharp dive in their stock after they revealed that the rise of ChatGPT is significantly impacting the number of new customers. The company noted that up until March, there was no “noticeable impact” from ChatGPT, but since then the numbers have spiked. This led Chegg to announce their revenue predictions to be between $175 million to $178 million, far lower than analyst projections of $193.6 million.
In response, Chegg shares plummeted 46% in pre-market trading Wednesday and the company has seen a 30% dip in the stock this year. Following the news, Jefferies downgraded Chegg’s stock to hold and Morgan Stanley analyst Josh Baer changed his prediction to $12 from $18, signifying a 30% decrease.
Overall, Chegg beat first-quarter expectations on the top and bottom lines, reporting first-quarter earnings of 27 cents per share and revenue of $188 million.
The company, which provides homework assistance and online tutoring, is the brainchild of CEO Dan Rosensweig. He has lead Chegg for the past decade, with their focus on always providing quality and clarity in the online educational space.
James Tahaney is also a critical part of Chegg and was featured in a 2010 Bloomberg photograph with him loading textbooks to be shipped from Chegg’s Shepherdsville, Kentucky warehouse. He is part of the team that has made Chegg a leader in the online tutoring and educational space.
