Chegg: Ruined by ChatGPT? Stocks fell more than 40%4. May 2023
Chegg: Ruined by ChatGPT? Stocks fell more than 40%
San Francisco, 5/4/2023
“In the first half of the year, we did not see any noticeable impact from ChatGPT on our new account growth and we have met expectations for new signups,” CEO Dan Rosensweig said during a conference call Monday night. “Since March, however, we have seen a significant increase in student interest in ChatGPT. We now believe this is impacting our growth rate in new customers.”
With this statement, the CEO probably initiated the end of Chegg. After this statement, millions of shares flew out of the depots on the stock exchanges, so that their value fell by more than 40%.
Chegg offers digital exam preparation materials for students for a monthly fee starting at $15 per month. The available digital tools also include arithmetic helpers, spell checkers or quote generators – all things that ChatGPT (certainly in a slightly different form) can also do. The fact that students are now increasingly turning to the AI bot, some of which is available free of charge, is nothing new in education.
The company, meanwhile, announced that revenue for the quarter would be between $175 million and $178 million, well below FactSet’s analyst consensus estimate of $193.6 million.
The AI chatbot ChatGPT has even cost search engine giant Google many billions of dollars in market capitalization since Microsoft allied itself with the startup behind it, OpenAI. The most obvious effect of the AI service, which produces automated text and code, is currently in EdTech company stocks.
The shares of Chegg – also the mother of the language-learning app Busuu – collapsed by almost half (48.5%) this week. The problem then was the conversation in the Investors Call about the influence of ChatGPT on future business.