Chegg Stock Plunges on Fears of Competition from ChatGPT
The stocks of Chegg, the education technology company, went through a major decline in a single day after its CEO warned of the competition from OpenAI’s free ChatGPT service. Chegg CEO, Dan Rosensweig, revealed that the company was satisfying its expectations regarding new sign-ups for its educational services at the start of the year. However, in recent months, the spike in student interest in ChatGPT has affected Chegg’s new customer growth rate.
As a result, Chegg shares fell by 48% and closed Tuesday at $9.08. This is a huge slump as the stocks traded above $100 at the start of 2021 when most students were attending online classes during the pandemic. The students were not willing to pay for the subscriptions of Chegg's service around midterms or finals as they had access to a free site like ChatGPT.
CheggMate, the company's own artificial intelligence companion, is now its answer to ChatGPT. CheggMate is supported by OpenAI's latest and most advanced artificial intelligence model, GPT-4. The use of CheggMate in combination with Chegg's personalized learning platform and proprietary dataset, along with GPT-4's problem-solving capabilities, will empower students to learn in real-time effectively and with greater accuracy than before.
OpenAI created a tool to detect if a student or artificial intelligence did their homework, which helped curb ChatGPT's reputation as a cheating machine. However, the tool is not foolproof. Some school districts have even blocked access to ChatGPT after it sparked panic among educators with the ease with which it could answer take-home test questions and assist with assignments.
Rosensweig believes that Tuesday's stock sell-off was “extraordinarily overblown.” He added that Chegg is still an exceptionally healthy company.
