Shares in education-related companies took a harsh hit Tuesday following reports that artificial intelligence (AI) chatbot services have become increasingly popular among students.
Chegg Inc., a Silicon Valley-based education technology provider offering online homework help, textbooks, and tutoring services, revealed that the emergence of AI chatbot services adversely affected revenue. CEO Dan Rosensweig said “At the start of the year, no recognizable impact from ChatGPT was seen on new account growth and we were staying on track with expected sign-ups.” Currently, the 18-year-old company reported a yearly sales drop of 7% in addition to a 5% decline in subscribers.
The news sparked waves of shock throughout the educational technology sector with Chegg’s share prices plummeting 48% and concluding at US 9.08. Other similar companies, likewise, suffered a drop in stocks such as UK based Pearson PLC with a 15% loss.
Rosensweig, however, mentioned that the students preferences towards ChatGPT was a minor setback and those loyal to the company “continue to select us and remain with us with high rates.” In order to accommodate the influx in student interest, the business launched a new AI driven tool CheggMate tailored to students using GPT-4 technology created by Microsoft Corp.
Chegg Inc has repeatedly faced accusations of facilitating student cheating, particular during the COVID-19 pandemic when tests and other assignments were done through an online platform instead of under teacher surveillance.
The slump in education technology stock is a clear indicator of the capabilities of AI bots to disrupt businesses beneath their financial stability. Although AI technology is praised for its multiple advantages, experts believe these kinds of services will be aimed at low stakes tasks to eliminate risks.
Chegg Inc. is a renowned education technology provider which offers digital and physical textbook rental services, online tutoring, and scholarships for college students. It is headquartered in California and was founded in 2004. Dan Rosensweig is the CEO of Chegg Inc. He is the former Chief Executive Officer of Activision Blizzard, and the co-founder and CEO of Guitar Hero. Rosensweig joined Chegg in 2018 and his expertise is credited for Chegg’s growth in the industry. He serves as a board member for HotChalk, BloomReach and Northern Trust Corporation.
