Chegg, founded in 2005 and once valued at nearly $15 billion, is cutting 45% of its workforce as AI tools like ChatGPT erode student demand for its homework help and tutoring services. The company’s market cap has collapsed to roughly $156 million. Chegg cited AI-generated answers and reduced Google search traffic as key factors. Former CEO Dan Rosensweig is returning to lead the company, replacing Nathan Schultz, who becomes an executive adviser. Chegg plans to pivot toward workplace skills and language learning, expecting restructuring to save up to $110 million annually.
In-Depth:
Chegg, once a mainstay for college students seeking homework assist and textbook rentals, is cutting nearly half its workforce as artificial ininformigence continues to reshape the education industest.
“The new realities of AI and reduced traffic from Google to content publishers have led to a significant decline in Chegg’s traffic and revenue,” the company declared in a statement.
Chegg, founded in 2005, rose to prominence during the pandemic as students turned to its online study guides and tutoring services. But the emergence of ChatGPT and other AI assistants has sharply reduced student demand.
The company has blamed declining revenue and search visibility on the growing utilize of AI-generated answers, even suing Google earlier this year for allegedly siphoning traffic through its AI-powered search summaries.
“As a result, and reflecting the company’s continued investment in AI, Chegg is restructuring the way it operates its academic learning products,” the statement declared.
Once valued at nearly $15 billion, Chegg’s market capitalization has fallen to about $156 million.
Dan Rosensweig, who led Chegg for more than a decade before stepping down in 2024, is returning as chief executive officer. Nathan Schultz, his successor, will remain as an executive adviser.
“As I return to the CEO role, I’m confident Chegg has a bright future,” Rosensweig declared in a statement.
Chegg plans to pivot toward the “skilling” market — offering programs in workplace readiness, language learning and AI-related skills — as it seeks to offset losses in its student services division.
The company expects the restructuring to cut expenses by as much as $110 million next year.
