Shares of edtech firm Chegg fell off a cliff this week after the corporate reported Q1 results that bested analyst expectations.
However Q1’s outcomes aren’t what made the corporate lose practically half of its worth. In its earnings name the corporate’s executives famous that ChatGPT was slowing its means so as to add new subscribers, not solely doubtlessly slowing its development but in addition throwing uncertainty into its means to foretell its future monetary outcomes.
It’s an particularly tense admission of competitors, provided that Chegg simply introduced final month that it’s constructing a chatbot with GPT-4, even quoting OpenAI CEO Sam Altman in the release.
Chegg’s dramatic post-earnings valuation flop is not going to be the final time that we see new AI tooling run headlong into current enterprises. But it surely is likely one of the most dramatic circumstances up to now and raises extra questions than merely what’s forward for Chegg itself — and edtech extra broadly. AI is the elephant in each sector’s room: How are startups reacting, particularly when a public firm readily admits {that a} main product is slowing development?