U.S. education services provider, Chegg’s revenue forecast for the current quarter fell below estimates.
The use of the viral chatbot ChatGPT was discovered to be against the growth, sending its shares 44% lower in premarket trade on Tuesday.
“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 rate,” Chegg CEO Dan Rosensweig said.
Chegg’s core business may become extinct as users experiment with free artificial intelligence (AI) products, according to Jefferies analyst Brent Thill, who downgraded the stock to “hold.”
At a time when schools were wrestling with the ramifications of the assignment drafting chatbot, the Santa Clara, California-based firm said last month that it will introduce ChatGPT’s AI-powered CheggMate, a study aide suited to kids’ needs.
Analysts are divided on whether CheggMate will be enough to offset a slump in the company’s core business.
Chegg said it was postponing its full-year estimate owing to the uncertainty of the impact on results, and that it expected second-quarter total revenue of $175 million to $178 million, falling short of Wall Street’s expectation of $186.3 million.
