Though Chegg beat first-quarter expectations on its top and bottom lines, shares were down 46% in premarket trading Tuesday.
in its shares Tuesday morning as ChatGPT is becoming a more popular, less expensive tool for students to finish last-minute work without doing much of it themselves.... [+]Chegg offers students the ability to pass courses without doing the work by providing access to its database of at least 46 million textbook and exam problems and to round-the-clock freelancers in India who answer student-submitted questions in real time, all for a subscription fee of about $20 a month.
Analyst Brent Thill at Jefferies downgraded the stock from “buy” to"hold" after the news, according to afrom Reuters, suggesting there are concerns that Chegg's main business will become extinct as students turn to free artificial intelligence tools, like ChatGPT. Chegg CEO Dan Rosensweig said Monday when announcing the drop that they’d seen “a significant spike in student interest in ChatGPT” since March, adding “we now believe it’s having an impact on our new customer growth rate.”The company had a huge growth moment during the pandemic, when students were learning from home and its services became even easier to use, causing Chegg’s stock prices to more than triple, according to previous.
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