What They Did
Chegg was an online education platform offering homework help, textbook solutions, and tutoring subscriptions for around $240/year. It was the go-to service for students who needed quick answers to homework questions and step-by-step textbook solutions.
How LLMs Killed Them
Students switched to free AI tools — ChatGPT, Bing AI, Google Bard — for homework answers instead of paying for Chegg subscriptions. Chegg became the first publicly traded company to explicitly blame ChatGPT for hurting its business.
Timeline
- May 2, 2023: Stock crashed ~50% in one day after CEO Dan Rosensweig told analysts ChatGPT was hurting the business. Lost $1 billion in market cap overnight.
- April 2023: Announced partnership with OpenAI to build "CheggMate" powered by GPT-4.
- August 2023: Pivoted again to partner with Scale AI for proprietary LLMs.
- Q1 2024: Revenue of $174.4M, down 7% YoY and 14% from Q1 2022. Lost 500,000+ paid subscribers.
- Late 2024: Announced restructuring, laid off 441 employees (23% of workforce).
- December 2025: Received NYSE non-compliance notice (stock below $1.00).
- 2026: A strategic review run by Goldman Sachs produced no acceptable offer; Chegg stayed independent by default.
- Mid-2026: Market capitalization fell to roughly $100M — down from $14.7B at the February 2021 peak — as the company de-emphasized its flagship Q&A business for skills and language learning.
- July 24, 2026: Received a fresh NYSE notice after 30 consecutive days below $1.00, entering a six-month cure period and weighing a reverse split to avoid delisting.
By the Numbers
- Stock down 99% from 2021 highs
- $14.5 billion in market value erased; market cap now around $100M
- Facing delisting from the NYSE absent a reverse split or recovery above $1.00
- No acquirer emerged from a Goldman Sachs-run strategic review
- 500,000+ paid subscribers lost