Ed tech house Chegg's share price halves after blaming ChatGPT for subscription dip
Meanwhile, it looks as though Chegg has been forced to adapt to large language models by pivoting to AI. Rosensweig said Chegg has been working with OpenAI to build an educational chatbot named Cheggmate.
The new product is expected to be released in beta mode next month. Chegg hasn't finalized costs yet, though Rosensweig said subscriptions for the LLM chatbot could start from $15.95 or $19.95 per month.], however, suggests the company's future is looking poorer while it pins its hopes on AI.Subscription services revenues of $168.4 million, a decline of 3 per cent compared to the previous yearNet income was $2.2 million, less than half of the year-ago's $5.
Rosensweig said he expects revenues from subscriptions to continue to fall in the next quarter, and won't be able to see if the upcoming Cheggmate chatbot can make up for losses until later in the year. Analysts slashed their share price targets for Chegg. Morgan Stanley's Josh Baer dropped his price target to $12 from $18, and said that AI"completely overshadowed" the results. Investment banking biz Jefferies downgraded the stock to hold from buy, decreasing its price target to $11 from $25, CNBCRosensweig assured investors that its retention rate among existing Chegg subscribers remains high, and that the release of ChatGPT doesn't threaten the company in the long run.
"This is not a sky falling thing. It's just an acknowledgement that there's been a technological shift. And we need to prepare for it and adjust our company and go after it aggressively and adjust our cost structure to do so. And we're doing all of that now," he said. ®
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