Chegg drops more than 40% after saying ChatGPT is killing its business
Chegg shares tumbled after the online education company said ChatGPT is hurting growth, and issued a weak second-quarter revenue outlook.
«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,» CEO Dan Rosensweig said during the earnings call Tuesday evening. «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.»
Chegg shares were last down 46% to $9.50 in premarket trading Wednesday.
Otherwise, Chegg beat first-quarter expectations on the top and bottom lines.
AI «completely overshadowed» the results, Morgan Stanley analyst Josh Baer said in a note following the report. The analyst slashed his price target to $12 from $18.
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