The story of Chegg began in 2006 when they found a loophole in the study pattern of students and profitable business to exploit. Chegg began providing students with answers to their assignment problems and also questions and answers to known exam and quiz solutions.
This began raking in millions of dollars for the small company, soon, Chegg became a global name. In November 2013, J.P Morgan led Chegg’s IPO at about $12 per share, way above the expected $9.5 and sold 15 million shares. Chegg’s valuation rose to about $1.1 billion in a fully diluted market.
Chegg’s market value peaked in February 2021 when their shares were priced at about $108 per share. This was a huge win for both the investors and founders. Things were going smoothly until ChatGPT launched.
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In November 2022, the Sam Altman led OpenAI team released ChatGPT, the popular conversational AI platform we all know, for free. This provided anyone with the ability to ask the AI agent for almost anything and get answers instantly in a concise manner without having to browse the internet. This provided students with a quick, more accurate and concise method of finding solutions to their problems. Immediately, Chegg felt the blow.
Chegg’s shares drop by 65% in same November, marking a sharp turning point for the global educational company which once had a promise of providing students with solutions for their assignments. In June 2024, Chegg cut off its global employee by 23% and another 45% later on the following year. Today Chegg is fighting for its survival, trading at $0.85 per share, and almost delisted from NYSE.
The story of Chegg is not a one-off situation, it is the bubble effect of the impact of AI on learning and education. As students adopt modern AI assisted solutions to improve their learning pace, others often get to feel the heat in a different manner.
Today, AI has dramatically changed the way we learn, school and solve problems. It is just a matter of time, because those who do not adopt to these technologies risk losing out or being swept under the carpet of civilization and technology.
For Chegg, they learnt this at the cost of losing $618 million of their livelihood.