Chegg stock falls 48% as CEO says ChatGPT is hurting new customer growth

Chegg’s stock fell 48% on 2 May 2023 after chief executive Dan Rosensweig told investors on an earnings call that the company was seeing an unusual drop in new customer sign-ups, and that he now believed ChatGPT was the cause. Chegg had entered the year meeting its own growth expectations, he said, but that changed after March — the period in which ChatGPT’s usage among students spread rapidly. Shares closed the day near $9, having traded above $17 the previous session.

The reaction was unusually sharp for a single earnings call, and it became one of the first concrete market signals that a general-purpose chatbot, available free, could substitute for a paid product built on curated homework help and answer libraries — rather than merely being a novelty. Rosensweig himself pushed back on the scale of the move the following day, telling CNBC the sell-off was “extraordinarily overblown” and that Chegg’s business was more resilient than the stock price implied.

The dispute did not resolve in Chegg’s favour. The company spent the following two years trying alternative strategies, including building its own AI study assistant on top of GPT-4, without reversing the decline in subscribers or search traffic. By late October 2025, Chegg had cut roughly 45% of its remaining workforce in a second major round of layoffs that year, with management again citing the shift in how students found answers as the cause. The May 2023 earnings call is now commonly cited as the moment the market first priced in generative AI’s disruption of an existing consumer-subscription business, rather than treating it as a story confined to the technology sector itself.