- Chegg’s shares lose 40% after the negative impact of ChatGPT on its finances.
- Chegg saw subscribers drop 5.1% and revenue drop 8% in the first quarter of 2023.
- The universities accuse Chegg of allowing cheating on exams and access to answers, although its CEO considers that ChatGPT is an opportunity and allows access to information to students with fewer resources.
The actions of the online learning service Chegg fell almost 40 percent this Tuesday, May 2 after the company recognized that the AI chatbot ChatGPT was impacting its finances.
In the financial report published by Chegg, the California-based company reported that its subscribers fell 5.1 percent in the first three months of the year and that its revenue fell nearly 8 percent.
Chegg is an on-demand question answering system widely used by schoolchildren and college students that costs $19.99 per month.
The company, in the report, withdrew guidance for the remainder of the fiscal year and its Nasdaq-listed shares fell 37.6 percent.
The novelty had an impact on the entire business segment: the shares of Pearsonfor example, listed on the London Stock Exchange, they fell more than 8.5 percent in early trading on Tuesday.
These companies that provide complementary services to education are affected because generative artificial intelligence can fulfill their services much more economically.
ChatGPT Impacts Chegg Stock
It’s not the only problem Chegg and similar services have. Universities accuse them of allowing students access to answers that they then use in classes and tests as their own.
And RosensweigCEO of Chegg, said that generative artificial intelligence like ChatGPT will affect society and business “at faster rates than people are used to.”
“Since March 2023, We are seeing a significant increase in student interest in ChatGPT and now we see that this is impacting our user growth rates.” added.
Likewise, Rosensweig said that his company is “aggressively embracing generative artificial intelligence” and prioritizing its investments to “leverage ChatGPT as an opportunity.”
Indeed, Chagg launched CheggMate in April. It is a service created with ChatGPT4 that allows students to get personalized content through conversations with artificial intelligence.
Universities also accuse Chegg of providing avenues for students to cheat on tests by accessing answers on demand.
The arrival of ChatGPT changed the scenario, providing the same students with access to answers to university questions and even complete essays for free.
Rosensweig said it is “nonsense” that ChatGPT and its services allow cheating on a test. “It just gives students with less access to information a support they might not otherwise have,” she explains.
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