Chegg, a company that helps with homework, crashed in the stock market due to ChatGPT

While the development of artificial intelligence technologies caused a transformation in many sectors, this transformation began to threaten another sector. Recently, artificial intelligence technologies have caused companies that provide homework assistance services to have a hard time.

Due to the widespread use of ChatGPT, AI technology has started to play an important role in writing and editing tasks. This has reduced the need for some task service providers.

YOU MAY LOSE INCOME

Chegg, a company that provides homework assistance services, has warned that ChatGPT is threatening its own future. The company’s shares fell 42 percent after the warning.

By providing students with guidance on taking tests and writing assignments, Chegg made its revenue and profit projections for the second quarter of 2023 well below analyst estimates. Chegg generates revenue with its subscription system, which starts at $15.95 per month. However, the fact that students get help from artificial intelligence technologies with their homework jeopardizes Chegg’s revenue.

‘IMPACT ON OUR GROWTH RATE’

Chegg CEO Dan Rosensweig said: “At the start of the first quarter, ChatGPT had no noticeable impact on our new account growth and we were meeting expectations for new signups. However, we have seen a significant increase in student interest in ChatGPT since March. We believe this has had an impact on our growth rate.”

Rosensweig said the impact of ChatGPT is beginning to be felt this spring when Chegg announced its first-quarter earnings yesterday. Rosensweig said existing subscriber retention rates are high and he vowed to adopt AI “aggressively and immediately.”

FALLING SHARES

The company’s shares had fallen 30 percent since the beginning of this year. Following Rosensweig’s words, shares fell from $17.60 to $10.16 in pre-market trading. Morgan Stanley analysts also lowered their forecasts for the company in today’s report.

Since OpenAI introduced the ChatGPT language model in November, many industries, from banking to media to education, have struggled to deal with the potential consequences of AI technologies. Also, many investors have started investing in companies working on similar models, from the US to China.