Chegg Shares Drop Sharply in 2025 Amid ChatGPT Impact on Subscriber Growth and Revenue
Chegg's stock plunges as the rise of ChatGPT AI chatbot significantly affects its subscriber growth and revenue projections, signaling a shift in the educational technology market.
Bill McColl brings over 25 years of expertise as a senior producer and writer across TV, radio, and digital platforms, leading teams to deliver impactful news coverage on major global events.
Key Insights
- Chegg (CHGG) shares have sharply declined following warnings that ChatGPT's AI chatbot is hindering new subscriber growth.
- CEO Dan Rosensweig revealed a notable surge in ChatGPT interest during March, now affecting Chegg's customer acquisition rates.
- The company's stock has lost nearly 50% of its value in a single day and is down 64% year-to-date.
Chegg, a leading provider of homework help and educational resources, has reported a significant downturn in subscriber growth attributed to the increasing adoption of ChatGPT's AI chatbot technology.
In its Q1 2024 earnings report, CEO Dan Rosensweig noted that while early-year impacts were minimal, March saw a substantial rise in ChatGPT usage among students, which is now negatively influencing Chegg's ability to attract new customers.
The company forecasts Q2 2024 revenue between $175 million and $178 million, approximately 10% below analyst expectations. Subscription revenue is projected to decline from $189.1 million last year to a range of $159 million to $162 million.
AI's Accelerating Influence on Education
Rosensweig emphasized that AI and large language models are rapidly transforming society and business sectors, with education already experiencing significant disruption. He expressed confidence that embracing this technology will ultimately benefit Chegg, with strategic investments prioritized to capitalize on emerging opportunities.
Despite Chegg surpassing earnings estimates with $0.27 per share and $188 million in sales for Q1, several analysts downgraded the stock following these revelations.
As a result, Chegg's shares have plummeted nearly 50% in one day and have declined 64% over the course of 2024.
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