Chegg, the American Educational Support Services Company has faced a more than 40% share drop as chatGPT is hurting its growth, “chatGPT is crumbling the business growth”.
Dan Rosenweig, CEO said that “in the first part of the year, we saw no noticeable impact from chatGPT. On our new account growth and we were meeting expectations on new sign-ups”.
However, “since March we saw a significant spike in student interest in chatGPT. We now believe it’s having an impact on our new customer growth rate”.
Chegg is an American-based education technology company that has widespread services and offers digital and physical textbooks on rent. The company also provides online tutoring, homework Assistance, and other important educational-related material and help to its student’s customers.
The company says revenue would be between $175 million and $178 million this quarter. Whereas, Factset’s analyst consensus estimate of $193.6 million
Due to the emergence of chatGPT, many educational institutions and students have diverted toward technology. As it is easy to use and provides more than 50% accurate answers and assistance. Whether, it’s about writing an email, generating summaries, summarizing the content, math problem solution, or writing prose or prose. It has taken a lead in almost every field.
Not only this, the advanced technology has knowledge about medical sciences, health, beauty, fitness, and education. Therefore, it has taken the world by storm and people find it easier and more effective to use.
Due to this fact, Chegg.Inc, faced a massive plunge in its share number, after the popularity of chatGPT. Within a daytime break, the company recorded a gap of US$17.59 to US$ 9.25. Indeed, the huge slump affected the company’s growth at a larger level.
Additionally, the revenue graph of the company pluged from USD $205.19 million in December 2022 to USD $187.60 million in March 2023.
Meanwhile, its net income dropped from USD $ 251.56 million in September 2022 to USD $1.86 million in December 2022.
As artificial intelligence is disrupting the smooth functioning of the companies, both Jafferies and Morgan Stanley reduced their price targets from $25 to $ 21 respectively.
According to reports, Chegg has planned to create its own AI platform, to assist students with their homework in an effort to compete with the rapidly growing popularity of AI platforms.
Interestingly, the creator of chatGPT, OenAI is ready to collaborate with Chegg Inc. However, Jeffries analyst Brent Thill says the impact of the product is uncertain.
“While CHGG plans to launch the CheggMate Beta this month to a select few, the timing of a full launch is unclear”, he said. “We don’t expect there to be any meaningful impact from CheggMate in FY23, believing any potential impact won’t show up until FY24 at the earliest”.
Evidently, from education to health, beauty, and media this every field, chatGPT has stupendously affected industries, leading to mass layoffs of highly talented and efficient people. Indeed, this OpenAI will mark a probable major shift in the technology sector.
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