Chegg Inc. plummeted as much as 38% after warning that the ChatGPT tool was threatening the growth of their homework help services, one of the market’s most notable reactions to signs for See how innovative AI is driving the industry.
The company, which offers online instruction for students to take exams and write essays, also posted revenue and profit forecasts for the current quarter that were much lower than analysts’ estimates. Chegg makes a lot of money money From subscriptions, which start at $15.95 a month, a revenue stream will be in jeopardy if students view AI chatbots as an alternative to paying.
CEO Dan Rosensweig said the impact of ChatGPT, an OpenAI tool that became popular last year, began to be felt this spring in prepared remarks accompanying the company’s first-quarter earnings. Chegg on Monday.
“In the first half of the year, we did not see a noticeable impact from ChatGPT on our new account growth, and we met our expectations for new signups,” he said. “However, since March, we have seen a spike in student interest in ChatGPT. We now believe it is having an impact on our new customer growth.”
The remarks, coupled with the bleak forecast, sent the stock down to as low as $10.91 in extended trading. Currently, they are down 30% this year, closing at $17.60.
Industries from bank Media and education have weighed in on the ramifications of general AI developments since OpenAI introduced ChatGPT publicly in November, while investors from the US to China chased stocks that claimed claims they’re working on similar models, it’s rare for CEOs to attribute their company’s poor performance to AI – followed by such a significant sell-off.
Rosensweig says that the retention rate of existing subscribers remains high, and he vowed to embrace AI “actively and immediately.”
“Throughout my career, I have witnessed the most important changes in the technology platform — from the creation of the internet to the explosion of mobile phones and the shift of software to the cloud. — and we believe AI is the next big step.”
