Shares in education tech company Chegg have plummeted by nearly 50 percent following a disclosure that AI chatbot technology, ChatGPT, has negatively affected the company’s financial performance. According to Financial Times, Chegg reported a seven percent decrease in revenues for the first quarter of 2023, equating to $187.6 million and a five percent decline in subscribers. This shocking news impacted Chegg’s competitors too, with shares of London listed Pearson dropping by 13.8 percent and US-listed education companies, such as Udemy and Coursera, declining by 4.95 percent and 3.3 percent respectively.
Dan Rosensweig, the company’s CEO, discussed how generative AI technology is shifting societies’ and businesses’ expectations during an earnings call. He noted a significant spike in student interest in ChatGPT since March, and suggested that this may be impacting the company’s new customer growth rate. Despite the difficulties posed by the technology, Rosensweig expressed optimism over the benefits Chegg could reap long term, and introduced CheggMate as a direct response to ChatGPT-4. This platform offers students tailored content via conversations and quizzes generated by AI to maximize their individual learning experience.
Citigroup analyst Tom Singlehurst offered perspective on the impact of ChatGPT on Chegg’s and Pearson’s businesses. He suggested the technology could compete with Chegg’s main offering, as it replicates their “study guide” service, and serve as a “second-order threat” to Pearson as it could potentially change the way content is created.
Somewhat controversially, Chegg has also been criticized for encouraging students to cheat by providing on-demand course answers. ChatGPT may perpetuate this problem as it is capable of generating free text responses, even essays, to college questions. This has been challenged by Rosensweig who insists the company’s goal is to provide resources to students who are underprivileged.
Chegg is a California based company that provides on-demand access to college course questions at a monthly fee of $19.95. Dan Rosensweig is their CEO and the one responsible for tackling the effects of ChatGPT on their business. Citigroup analyst Tom Singlehurst has been mentioned for offering insight into the impact of AI chatbot technology on Chegg and Pearson. Made to address the effects mentioned above, CheggMate is the brand-new service created by Chegg with the assistance of ChatGPT-4. It offers students an individualized learning experience through AI-generated conversations and quizzes. It is undeniable that AI technology is advancing in the educational sector and may disrupt the way we think of teaching and learning.
