Chegg’s stock has dropped more than 40%, wiping over $1 billion off its current market valuation, after the educational technology company was accused of declining enrollment on ChatGPT.
Dan Rosensweig, CEO of Chegg stated during Monday evening’s earning call, “In the first half of the year, we noticed no noticeable effect from ChatGPT on new account growth, and we were reaching estimates on new sign-ups. “However, since March we saw a significant spike in student interest in ChatGPT. We now believe it’s having an impact on our new customer growth rate.”
On Thursday, Chegg shares went up to $9.59 after it dropped to $9.25 on Tuesday. But it’s still far from its original rate of $17.60.Citigroup analyst Tom Singlehurst claimed that ChatGPT might exactly copy Chegg’s “study guide” service, which provides students with pre-written responses to questions on college courses.
Is Chat GPT superior to a human instructor?
Chat GPT is a powerful tool that can improve and expand the educational experience—it is not a substitute for actual teachers or students. Students and educators can accomplish their learning and teaching objectives more quickly and effectively using Chat GPT. Teachers and students can benefit from Chat GPT’s ability to encourage creativity, inquiry, and critical thinking.
Chegg, the online tutoring and homework assistance provider, has reported that its revenue for the current quarter is expected to be between $175 million and $178 million. This falls significantly short of the analyst consensus estimate of $193.6 million as reported by FactSet.
Additionally, the company’s revenue from subscription services and profit both decreased year over year. All three of the categories are expected to have annual declines in the second quarter, according to Chegg.
Chegg appears to have turned to AI to adapt to huge language models. According to Rosensweig, Chegg has been collaborating with OpenAI to create the educational chatbot known as Cheggmate.
According to Rosensweig, the company’s retention rate among current Chegg subscribers is still high, and the introduction of ChatGPT will be fine for its viability.
Additionally, Rosensweig expressed, “This is not a sky-falling thing. It’s merely a recognition that there has been a technological change. And to do so, we need to make the necessary preparations, changes to our business, relentless pursuit of it, and cost structure adjustments. And we’re already carrying out all of it.”
Jefferies analyst Brent Thill has expressed uncertainty about the impact of Chegg’s new AI product, CheggMate, which is being developed in collaboration with OpenAI, the developer of ChatGPT. CheggMate is designed to assist students with their homework. However, it remains to be seen how successful the product will be in the market.
He stated, “While CHGG plans to launch the CheggMate beta this month to a select few, the timing of a full launch is unclear, we don’t expect there to be any meaningful impact from CheggMate in FY23, believing any potential impact won’t show up until FY24 at the earliest.”
Does ChatGPT Influence Students’ Creativity?
According to experts, ChatGPT can impair students’ capacity to resolve their issues. Teachers might worry about Chat GPT since it would eliminate all room for originality. However, experts also point out that since students don’t have to take the exam online and must solve problems by consulting their textbooks, they shouldn’t be as concerned.