Chegg shares slump to more than 40%, blames ChatGPT for its stocks rout
Witnessing its considerable performance, the company was estimated to hit a revenue of $193.6 million. However, after the company’s AI statement made rounds, Chegg opined this quarter’s revenue to be between $ 175 million to $ 178 million.
New Delhi: The American Educational Support Services Company, Chegg, has witnessed more than 40 percent share plunge, after it stated, ‘Chat GPT is crumbling the business growth’. According to the company CEO Dan Rosensweig, there was no initial impact of Chat GPT and the company was fairly meeting its expectations. However, the month of March recorded a significant surge in students diverting to the AI platform.
California-based Chegg, Inc. is an American education technology company that holds a wide spectrum of services, providing digital and physical textbooks on rent, online tutoring, and homework help, among other services to its student customers.
Witnessing its considerable performance, the company was estimated to hit a revenue of $193.6 million. However, after the company’s AI statement made rounds, Chegg opined this quarter’s revenue to be between $ 175 million to $ 178 million.
Chegg Inc. recorded a massive plunge in its share numbers, from USD $17.59 on May 1 to USD $9.25 in the gap of a single day. This huge slump affected the company’s growth at a larger level.
(Data courtesy: Google Finance)
Additionally, the revenue graph of the company also nosedived from USD $205.19 million in December 2022 to USD $187.60 million in March 2023. Meanwhile, its net income descended from USD $251.56 million in September 2022 to USD $1.86 million in December 2022.
(Data courtesy: Google Finance)
In view of artificial intelligence disrupting the smooth functioning of the companies, both Jefferies and Morgan Stanley too slashed their price targets, from $25 to $11 and $18 to $12, respectively.
Reportedly, in order to challenge the burgeoning popularity of AI platforms, Chegg is developing its own AI platform, Cheggmate, which will help students with their homework. Interestingly, Cheggmate is in collaboration with OpenAI, which develops Chat GPT.
Evidently, from education to banking or the media, Chat GPT has stupendously affected industries, leading to mass layoffs and an insane tumbling in companies’ growth. With this, OpenAI will mark a probable major shift in the technology market.