Most companies are starting to figure out how artificial intelligence will change the way they do business. Chegg is trying to avoid becoming its first major victim.
The online education company was for many years the go-to source for students who wanted help with their homework, or a potential tool for plagiarism. The shift to virtual learning during the pandemic sent subscriptions and its stock price to record highs.
Then came ChatGPT. Suddenly students had a free alternative to the answers Chegg spent years developing with thousands of contractors in India. Instead of "Chegging" the solution, they began canceling their subscriptions and plugging questions into chatbots.
Since ChatGPT's launch, Chegg has lost more than half a million subscribers who pay up to $19.95 a month for pre-written answers to textbook questions and on-demand help from experts. Its stock is down 99% from early 2021, erasing some $14.5 billion of market value. Bond traders have doubts the company will continue bringing in enough cash to pay its debts.
Though Chegg has built its own AI products, the company is struggling to convince customers and investors it still has value in a market upended by ChatGPT.
"It's free, it's instant, and you don't really have to worry if the problem is there or not," Jonah Tang, an M.B.A. candidate at Point Loma Nazarene University in San Diego, said of the advantages of using ChatGPT for homework help over Chegg.
A survey of college students by investment bank Needham found 30% intended to use Chegg this semester, down from 38% in the spring, and 62% planned to use ChatGPT, up from 43%.
"My concern is that the headwinds to Chegg's top line aren't temporary—they're more structural in nature," said Needham analyst Ryan MacDonald.
This story is from the {{IssueName}} edition of {{MagazineName}}.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the {{IssueName}} edition of {{MagazineName}}.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
Using AI In Workflow To Make Work Less Stressful
Al's role in workflow automation goes beyond efficiency-it also directly impacts employee well-being
Employees' Provident Fund Has Issues. Can Employees Opt Out?
EPF contributors face mounting challenges as limited withdrawal options and high rejection rates persist
The Promise And Challenges Of Insurance Reform
One of the most awaited results of the hike in foreign holding is the infusion of capital
Becoming better at work with daily reflection
Fujifilm India's Arun Babu on the significance of constant learning
A new incentive structure could help preserve standing forests
The proposed tropical forest forever facility would use blended finance to reward countries for protecting their green cover
Let someone else play knight in shining armour for Disney
CEO Iger should quit can-kicking and help the next chief succeed
Thomas E. Kurtz gave us our Basic lessons in software
He wanted computers kept accessible, as seen in the programming language he pioneered
Why the 5-star hotel experience needs urgent reforms
From gagging TV sets to guiding guests on surviving tucked-in beds, plenty needs to be fixed
COP-29 could not escape the US election's impact
The $300 billion pledged by rich countries as climate funding is grossly insufficient. True, Trump's US may revert to climate scepticism, but others must try harder to mobilize funds
Empower women to participate equally in Digital India's success
We must go beyond bridging gaps in internet access and maximize women's agency in using devices
