There’s been a lot of talk about the impact of artificial intelligence on jobs, and now public companies are starting to feel its effects. Chegg Inc., a company that provided me with vital services during my college years, has become the latest victim of AI.
For those unfamiliar with Chegg, they offer homework help, digital and physical textbook rentals, online tutoring, and other student services. On May 1st, Chegg held their Q1 2023 earnings call, and let's just say it didn't sit well with investors. Check out the hit their stock took after they released their earnings.
1 week view of the Chegg - Robinhood
During the call, CEO Dan Rosenweig talked about AI's impact on society and business. What stood out to me was when he said, “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”. Students across the country are turning to AI tools to help them study for free instead of paying Chegg's subscription fee.
So how does Chegg plan to compete with AI? By adopting the technology. They have a new service called CheggMate, which uses OpenAI's technology to provide tailor-made study suggestions for students. Learn more by clicking on the image below.
Knowing that Chegg is moving towards AI, I wonder how it will affect their hiring. Luckily, Doug Anmuth from JP Morgan asked on the call, “Do you feel like you have the right team and everything you need in place to become more of an AI business going forward?” (Spot on question, Doug.)
Based on Dan's response, Chegg plans to hire more AI talent and expertise to speed up the rollout of CheggMate and take advantage of the growth potential in the market. Moving forward, Chegg will need to be strategic about who they hire and how much they pay them. Fortunately, AI is expected to replace some content costs, making it more cost-effective over time. This means that Chegg will need to hire content creators, educators, and subject matter experts who can collaborate with AI developers to produce high-quality, relevant, and engaging content that meets the diverse needs and preferences of its students.
I also think they'll need to hire more UI and design experts who can create visually appealing and user-friendly interfaces for its AI-powered tools and services. Chegg has had a rough quarter, but they are taking steps to adapt to the changing market by embracing AI technology. However, they will need to be strategic about their hiring and balance their investment in AI with their content creation and maintenance costs. With the right team in place, Chegg can continue to provide valuable services to students and remain competitive in the edtech market.
The author is not a financial advisor. The information contained in this article is for entertainment and informational purposes only. Before investing, please consult a licensed professional. Any stock information mentioned in this article should not be considered as "investment recommendations". The author shall not be held liable for any losses you may incur for investing and trading in the stock market in an attempt to mirror what is discussed.