If thinking about Chegg gives you PTSD to the days when you were in school, I might have some good news for you: The company known for textbook rentals and homework help is running on fumes. Chegg’s stock is down a whopping 99% since its highs in 2021, erasing $14.5 billion in value, and the company has lost half a million paid subscribers. After revenue keeps dropping quarter after quarter, there are doubts it will be able to continue paying its debts.
Chegg should be familiar to most people who have been to college in recent years. It started out in the 2000s renting out textbooks and later expanded into online study guides, and eventually into a platform with pre-written answers to common homework questions.
Unfortunately, the launch of ChatGPT all but annihilated Chegg’s entire business model. The company for years paid thousands of contractors to write answers to questions across every major subject, which is quite a labor intensive process—and there’s no guarantee they will even have the answer to your question. As we know, ChatGPT on the other hand has ingested pretty much the entire internet, and has likely seen any history question you might throw at it.
As the Wall Street Journal reports, the launch of ChatGPT saw students drop their $20 a month Chegg subscriptions in favor of the chatbot:
Though Chegg has built its own AI products, the company is struggling to convince customers and investors it still has value in a market upended by ChatGPT.
“It’s free, it’s instant, and you don’t really have to worry if the problem is there or not,” Jonah Tang, an M.B.A. candidate at Point Loma Nazarene University in San Diego, said of the advantages of using ChatGPT for homework help over Chegg.
A survey of college students by investment bank Needham found 30% intended to use Chegg this semester, down from 38% in the spring, and 62% planned to use ChatGPT, up from 43%.
It’s unclear what Chegg can really do to stem the bleeding at this point. The company l