Dan Rosensweig, Chegg CEO
Scott Mullin | CNBC
Chegg announced Monday that it will lay off 388 people, or about 45% of its workforce, as its revenue plummets due to the “new reality” of artificial intelligence and declining traffic from internet searches.
The 20-year-old online education company has been hurt by the rise of generative AI software tools, such as OpenAI’s ChatGPT, which are growing in popularity among students. Chegg also filed a lawsuit. google In February, it claimed that AI-powered summarization of search results was hurting traffic and sales.
The company reiterated that claim on Monday, saying AI and “reduced traffic from Google to content publishers” are hurting its business.
“As a result, Chegg is restructuring the way it operates its academic learning products, reflecting the company’s continued investment in AI,” the company said.
The layoffs come after Chegg laid off 22% of its workforce in May, citing increased adoption of AI.
Chegg went public in 2013, and its stock hit a high of $113.51 in February 2021 due to the coronavirus pandemic and the shift to remote learning. Since then, the stock has lost 99% of its value. Market capitalization peaked at about $14.7 billion, but has since fallen to about $156 million.
The company offers textbook rentals, homework help, and tutoring, as well as a new suite of AI tools, including a service that automatically generates flashcards.
As part of Monday’s announcement, the company announced that Dan Rosenzweig will immediately return as CEO, replacing Nathan Schultz, who will step down from his role and remain as an executive advisor to Rosenzweig and Chegg’s board of directors.
Mr. Rosensweig, a former top executive at Yahoo who joined Chegg as CEO in 2010, resigned from his position in April 2024, handing the job over to Mr. Schultz, who was then the company’s executive director.
Chegg also said it has completed a strategic review process that began earlier this year and plans to continue as an independent company.
“After careful consideration of multiple proposals, the board of directors unanimously determined that remaining an independent public company provides the best opportunity to maximize long-term shareholder value,” the company said in a statement.
In April, Chegg was on the verge of being delisted from the New York Stock Exchange. Chegg was alerted when the stock was trading at about 60 cents. If you trade below $1 for 30 consecutive business days, you will receive a warning. By May, the stock price exceeded $1.
—CNBC’s Ari Levy contributed to this report.
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