The Decline of Chegg: How ChatGPT Altered the Landscape of Online Education

In a dramatic turn of events, Chegg Inc., known for its homework assistance services, has seen its market value plummet by an astonishing 95%. Once a prominent player on the New York Stock Exchange, boasting a market capitalization of $471.22 million, Chegg’s business model, which allowed students to access immediate solutions for their homework via outsourced experts, is facing unprecedented challenges.

For years, Chegg offered a platform where students could upload their homework queries and receive detailed answers in a matter of hours. This service, marketed with phrases like “Get Homework Help,” raised eyebrows across the educational community for its controversial nature. Critics have described it as “mass-produced organized cheating,” highlighting the ethical questions surrounding its use.

However, the tides have shifted dramatically with the emergence of AI technologies like ChatGPT. Unlike Chegg, which charged for its services, ChatGPT delivers instant assistance for free, rendering traditional homework help platforms increasingly irrelevant. This shift in demand has placed Chegg’s economic sustainability in serious jeopardy.

As evidence of this trend, Chegg has witnessed a staggering decline in its stock price—falling from an all-time high of $113 in early 2021 to just $4 per share today. This sharp decline has prompted financial analysts, such as Goldman Sachs’ Eric Sheridan, to downgrade the company’s stock rating and reduce the price target from $10 to $8. The daily drop has reached alarming rates, with losses hitting up to 12% in a single day.

For investors, this decline represents a cautionary tale. A $10,000 investment in Chegg back in early 2021 would now be worth less than $500, illustrating the dramatic shift in the online education landscape.

As we move forward, it raises the question: will online education providers like Chegg adapt to the growing advancements in AI, or will they be left behind in a rapidly evolving marketplace? To explore the full story behind Chegg’s decline and the implications for the future of online education, read more here.