Education technology company Chegg has shared its thoughts on ChatGPT hurting their business growth as they announce their shares declining 48% to $9.01 during Tuesday’s trading.
“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,” CEO Dan Rosensweig said during an earnings call Monday evening. “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 provides homework assistance and online tutoring to students of all grades, including aspiring college graduates. The company is currently working on developing its own AI product, CheggMate, which will be utilized to help students with their homework.
Although CheggMate is being built in collaboration with OpenAI, Jefferies analyst Brent Thill says that the impact of their specific product remains 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.”
Chegg management did not clarify when the company’s AI strategy will be available to all customers, or and how the company plans to monetize that strategy long-term, per Thill.
“This is not a sky’s falling thing,” Rosensweig said. “It’s just an acknowledgment that there’s been a technological shift. And we need to prepare for it and adjust our company and go after it aggressively and adjust our cost structure to do so.”
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