AI killed Chegg
The stock's down 80% over the past year, and now this...
Online education company Chegg just announced it’s laying off 22% of its workforce (248 employees).
Why?
Per Reuters, it’s “to cut costs and streamline its operations as students increasingly turn to AI-powered tools such as ChatGPT over traditional edtech platforms.”
Chegg offers online tutoring and textbook rentals by charging a subscription.
It was a thriving business. From 2016 to 2022, the company grew subscribers from 1.5 million to 8.2 million.
But then ChatGPT, the popular AI chatbot, showed up like the grim reaper…
Suddenly, everyone had access to their own interactive AI that could function in many ways like a private tutor… for free.
Overnight, Chegg’s business model became obsolete. And shares have been in freefall since.
The stock has plummeted 83% (!) over the past year. Ouch:
RiskHedge chief analyst Stephen McBride first warned about Chegg 2 years ago. The writing was on the wall. The stock was doomed because of AI.
He doubled down in May of last year in our popular eletter The Jolt: “Taken to the AI slaughterhouse”… telling subscribers to avoid “bottom fishing for a bargain” in CHGG, because it wasn’t a temporary setback.
CHGG was — and is — an AI “disruptee.” Invest at your own risk.
And here’s the big picture…
According to Stephen, we’re witnessing the early stages of a permanent shift that will forever disrupt education.
For the first time, AI can give every student their own expert super-teacher.
(Check out what Synthesis and Khan Academy are doing.)
Here’s Stephen with the final word:
AI is unlike any other disruption I’ve invested in...
The profits will be good, when you own the right stocks.
But even greater gains will come from using AI. I’d trade my Nvidia (NVDA) profits for my daughter becoming a straight-A student all day.
AI can already teach middle and high school kids. How long before it can take you through an entire four-year degree… for free or close to it?
It’s coming. And if anything needs disruption, it’s college with its skyrocketing costs and descent into ideology.
If I could short college, I would.
For now, the best “hedge” against this disruption is mastering AI tools so we can give our kids (and grandkids) a leg up.
Thanks for reading, and if you enjoyed this please share!
Chris Reilly
Executive Editor, RiskHedge