Chegg, a Brand for International Students' Homework Help, Sees Market Value Plummet by About 99%
Education technology company Chegg's market value has drastically shrunk from a peak of about $14.7 billion in 2021 to approximately $120 million, evaporating about 99%.
The company's business has been impacted by generative AI, with a continuous decline in subscription users and revenue, and it recently received a compliance notice regarding its stock price from the NYSE.
The event-driven AI is accelerating the replacement of traditional online learning platforms, with funds shifting from educational support services to AI tools, putting pressure on Chegg, while free or low-cost AI solutions benefit.
Source: Public Information
ABAB AI Insight
Chegg was a commonly used platform for international students and students for homework help and question banks. After reaching a market value peak in 2021, it quickly lost users due to generative AI like ChatGPT providing instant free alternatives, leading to a significant decline in revenue and subscriptions, accompanied by layoffs.
In terms of capital path, the company has shifted from a high-valuation growth story to attempts at survival and transformation, motivated by the need to respond to technological replacement, reallocating resources from maintaining content libraries to new businesses like skills training, but has failed to reverse the collapse in market value.
Similar to other education or content companies that rely on information scarcity being disrupted by AI, it is currently in a phase of traditional EdTech adapting from a subscription model to AI.
Essentially, this is a case of technological replacement: generative AI directly replaces manually organized question banks and tutoring, as it is instant, personalized, and cheaper, thus reconstructing the value chain of student learning assistance.
ABAB News · Cognitive Law
Business models based on information scarcity fear free AI the most
A 99% market value evaporation often begins with a technological shock
Tools relied upon by international students are the first to be replaced by AI