This online education platform is firing 45% of its workforce
What's the story
Chegg, a leading online education platform, has announced plans to lay off around 388 employees, nearly 45% of its total workforce. The decision comes as the company struggles with declining revenue due to the rise of artificial intelligence (AI) tools and reduced traffic from internet searches. The layoffs follow a similar move in May when Chegg had cut 22% of its staff citing increased adoption of AI.
Impact of AI
Generative AI's impact and Chegg's lawsuit against Google
The emergence of generative AI software tools, like OpenAI's ChatGPT, has posed a major challenge for Chegg. These tools are increasingly becoming popular among students, affecting Chegg's business model. In February, the company even sued Google over its AI summaries of search results hurting traffic and sales. Despite these challenges, Chegg continues to invest in AI and is restructuring its academic learning products accordingly.
Market position
Stock performance and market capitalization
Since going public in 2013, Chegg's stock price has seen a major decline, losing 99% of its value. The company's market cap has also dropped from a peak of around $14.7 billion to about $156 million now. Despite these challenges, Chegg remains committed to its core services like textbook rentals and tutoring while also offering new AI tools such as an automatic flashcard generator.
Management shakeup
Leadership change and commitment to independence
In light of these developments, Chegg announced a leadership change with Dan Rosensweig returning as CEO. He replaces Nathan Schultz who will now serve as an executive advisor to Rosensweig and the board. The company also announced its decision to remain independent after reviewing various proposals earlier this year. This decision comes despite Chegg being at risk of delisting from the New York Stock Exchange in April due to its stock trading below $1 for a consecutive 30 trading-day period.