Chegg is on its last legs after ChatGPT sent down its stock by 99%
If the thought of Chegg brings back memories from your school days, then I have some good news: the company that rents textbooks and provides homework help is on its last legs. Chegg stock has dropped a staggering 99% from its 2021 highs, wiping out $14.5 billion of value. The company also lost half a milion paid subscribers. Most people who attended college in the last few years will recognize Chegg. It started out in the 2000s renting out textbooks and later expanded into online study guides, and eventually into a platform with pre-written answers to common homework questions.
Unfortunately, the launch of ChatGPT all but annihilated Chegg’s entire business model. As the Wall Street Journal reports, students have been abandoning their $20 a month Chegg subscriptions in favor of ChatGPT. As we know, ChatGPT on the other hand has ingested pretty much the entire internet, and has likely seen any history question you might throw at it.
As the Wall Street Journal reports, the launch of ChatGPT saw students drop their $20 a month Chegg subscriptions in favor of the chatbot:
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%.
It’s unclear what Chegg can really do to stem the bleeding at this point. Over the summer, 441 employees were laid off. This represents a quarter. It’s trying to target what the new CEO describes as “curious learners” by offering more comprehensive AI-assisted answers as well as live counseling.
What’s perhaps most sad is that, according to the Journal, employees actually asked for resources in 2022 to develop AI tools for automating answers. The company experienced a surge in demand for its virtual learning tools during the pandemic, when the company was required to provide answers quickly. Wikipedia is not trusted by students, yet they use it to find citations. Chatbots, like ChatGPT, have no idea about math. They just guess the words to form a sentence. The chatbots will give you answers that appear to be correct, but are not. Chatbots are better for other subjects like history, but answers should be double-checked. For other subjects like history, chatbots are somewhat better, but answers should be double-checked.
Maybe Chegg could work harder to help people understand this? Maybe Chegg could do more to help people understand this?
