Chegg Stock Is Down Due To Ai

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Chegg Stock Is Down Due To Ai

Chegg Stock Is Down 99% Due To Ai

Chegg was once a big tech stock with a history of fast growth. However, the stock was absolutely crushed by the AI and is now a penny stock.

Chegg stock has lost 99% of its value in a span of 4 years, and AI is at the core of all of this. These days, the market is focusing on tariffs and global trade. However, AI continues to disrupt industries in the background.

Chegg Is Now A Penny Stock

One company that has been hit really hard by AI is Chegg (CHGG). Back in 2021, their stock price was $113, which is now around $0.75.

Chegg is involved in the education technology and offers a number of services. This includes homework help, textbook rentals, and other resources for study. The key customers of Chegg were high school/college students.

But with the arrival of ChatGPT & other AI tools, the students can now get free help with their homework. When something is available for free, why would someone pay for Chegg?

The availability of free AI tools like ChatGPT has really hit the core business of Chegg. This can be confirmed by their subscribers, which have declined from 5.1 million to just 3.2 million.

The revenue of Chegg has also declined to just $121 million, which was nearly $188 million in the past. The cash position of Chegg has also taken a hit, and the company is now in the red.

To stay afloat, Chegg is cutting costs and is also thinking about getting acquired by another firm. The company has also found another income source by licensing its content to language model firms.

However, this will be a double-edged sword as the company is selling the very educational data which makes it money. Once enough AI tools are trained on the Cheggs data, the students will find the same value elsewhere for free.

This is also a wake-up call for many other companies that have yet to experience Chegg's fate.

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