What Was Once a King, Is Now a Peasant - Thanks, ChatGPT (Shares Plunge 99%)

Well, if the mere mention of Chegg doesn’t send you spiraling into a flashback of late-night cramming sessions, overpriced textbooks, and a soul-crushing existential crisis in the campus library, you’re one of the lucky ones. If you’re an investor though? Well, that’s even worse. 

(Source: Giphy) 

In short, things are looking terribly bleak for the once-mighty education giant as the company that was once hailed as a savior for broke students everywhere with its textbook rentals and questionable homework help is now circling the drain faster than my friggin ‘GPA after midterms. 

In fact, since its peak in 2021, Chegg’s stock has taken a plunge so steep it’s practically a meme at this point—down a casual 99%, while losing half a million paid subscribers in the process. Ooof.

(Source: Gizmodo) 

You see, in case you didn’t know, Chegg was the go-to for any college student who didn’t feel like sacrificing their future firstborn to pay for a stack of textbooks they’d use exactly once. Then Chegg leveled up, offering answers to homework questions and study guides like some sketchy academic fairy godmother. Pre-2022, life was sweet. 

They had an army of contractors grinding away, cranking out answers across every subject imaginable. Sure, it was basically a glorified sweatshop for academic solutions, but hey, they were the kings of the castle, and students were eating it up. 

(Source: Giphy) 

And then chaos happened: ChatGPT, the AI miracle technology entered the scene completely uninvited and ready to f**k ish up. Suddenly, students had a free, instant alternative to the answers Chegg had spent years (and millions) developing. I mean, why pay $19.95 a month when you could just ask a chatbot that’s inhaled half the internet and spits out an answer in 0.2 seconds? 

What’s more is that Chegg didn’t even see it coming. It’s like they were riding high on the pandemic-fueled wave of virtual learning, only to have ChatGPT stroll in coordinate the ultimate rug pull. Now here’s the worst part: Chegg had years to get on the AI bandwagon. But they decided to pull a Titanic (a metaphor Chegg probably doesn’t appreciate right now) and ignore the iceberg until it was too late. 

(Source: Wall Street Journal) 

For instance, word on the street is that some employees were smart enough to suggest developing AI tools back in 2022, but leadership shut them down. Why? Because they didn’t think a chatbot would be a real threat LOL. Well, Chegg, life comes at you fast don’t it? 

(Source: Giphy) 

A survey by Needham found that while 30% of students planned to use Chegg this semester, a whopping 62% were all-in on ChatGPT. As one MBA student so eloquently put it, “It’s free, it’s instant, and you don’t have to worry if the problem is there or not.” Translation: Why pay for a service that’s now as outdated as a flip phone when you’ve got a free AI tutor that doesn’t sleep, doesn’t charge, and doesn’t judge you for Googling “how to pass Econ 101 without trying”?

(Source: Giphy) 

The result? Chegg’s been in full-blown panic mode ever since ChatGPT’s release. They’ve laid off 441 employees (about a quarter of their workforce) and brought in a new CEO, Nathan Schultz, to try and stop the bleeding. His genius strategy? Target “curious learners” (whatever that hell that means) with a mix of AI-assisted answers and live counseling. 

They even tried launching their own ChatGPT knockoff, CheggMate, with OpenAI. But it flopped so hard that they’ve already started distancing themselves from it. Meaning, the writing’s on the wall for Chegg, and it’s in bold, underlined, and probably Comic Sans for good measure. 

(Source: Wall Street Journal) 

Sure, they’re trying to pivot, but the reality is looking to be a slow and painful death for the company. Again, ChatGPT’s free, fast, and (mostly) reliable, which is more than enough for students who are willing to gamble on the occasional wrong answer. Meanwhile, Chegg’s still out here trying to charge for a service that’s basically been rendered obsolete overnight.

(Source: Giphy) 

In the end, unless Chegg can pull off an absolute miracle—and fast—the company is officially on track to become the first major casualty of the AI revolution. Travesty. 

In the meantime, do what you will with this information, but more importantly take note. AI (while still overhyped to an extent) is no doubt a gamechanger that’s set to claim many more victims as it progresses. And unfortunately, for Chegg investors, they just became the poster child of the fallout. As always, stay safe and stay frosty, friends! Until next time…

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Stocks.News does not hold positions in companies mentioned in the article.