ChatGPT Sends Shares in Online Learning Giants into Tailspin
Shares in companies specializing in publishing school textbooks and offering online classes took a massive hit after signs emerged that AI-bots such as ChatGPT were eating into their business.
Chegg, an education tech company based in Silicon Valley, provides online homework help and textbooks. Its CEO recently admitted that the explosion of generative AI chatbots had hurt revenue. "In the first part of the year, we saw no noticeable impact from ChatGPT on our new account growth and we were meeting expectations on new sign-ups," Chegg CEO Dan Rosensweig told analysts on Monday. "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."
This admission sent shockwaves through the ed tech sector and pushed Chegg's share price down by almost 50 percent. Similar companies such as UK-based Pearson lost 15 percent in London. Chegg reported a sales drop of seven percent over a year, as well as a five percent fall in subscribers.
Chegg has faced accusations of providing students with ready-made ways to cheat, especially during the Covid-19 pandemic when test-taking was largely taking place online outside a teacher's supervision. The company has launched its own AI-powered tool called CheggMate that is tailored to students and based on GPT-4, the latest iteration of the technology created by Microsoft-backed OpenAI and powers ChatGPT.
While ChatGPT-style AI has largely been seen as a boon for the economy, the implosion in education tech stocks was the clearest example yet of the technology's capabilities assailing a company's bottom line.
Given the technology's untested nature, experts believe that the companies most vulnerable to AI for now are businesses that require little specialization, such as call centers or tutoring services, as offered by Chegg and others. For the time being, "you're only going to see very specific kinds of tasks that people are willing to farm out to generative AI," said Vishal Gupta, an associate professor at the USC Marshall School of Business.
These tasks are going to be "lower stakes" given the uncertainties about the technology, he added.
