Chegg, the education technology company that became the king of the classroom in early 2021 during the coronavirus pandemic, has effectively become the “first company” to be “killed” by AI. The online learning platform rode the wave of demand for distance learning due to the pandemic, briefly trading as high as $113.51 per share in February 2021, giving it a peak market capitalization of about $14.7 billion. That was then. By last year, the company’s market capitalization had plummeted to about $156 million, losing nearly 99% of its stock value in just a few years. At the time of writing, Chegg’s stock price was $0.99.The company is scheduled to announce its financial results for the first quarter of 2026, ended March 31, 2026, on Wednesday, May 6. According to its fourth quarter 2025 financial results, the company’s total net revenue was $72.7 million, down 49% year over year.
AI’s “new reality”
Chegg announced in October that it would lay off 45% of its workforce (388 employees) as it struggles to survive with the rise of generative AI tools like ChatGPT. For 20 years, Chegg made its fortune by offering textbook rentals and a vast database of homework answers. But students who once paid for Chegg subscriptions are now turning to free AI chatbots that can solve math problems or write essays in seconds.“The new realities of artificial intelligence…led to a sharp decline in revenue,” the company acknowledged in a statement at the time.Apart from AI chatbots, Chegg is also battling search engines. The company recently sued Google, claiming that the AI-generated summaries at the top of search results were “stealing” traffic. Google cut off the flow of visitors to Chegg’s website by displaying answers directly to students on the search page. This has also been claimed in several other publications. Between ChatGPT’s instant answers and Google’s AI summaries, Chegg’s traditional business model is nearly wiped out.The collapse was as rapid as it was brutal. Chegg nearly got kicked off the New York Stock Exchange last year after its stock price remained below $1 for too long, but it managed to regain that mark in May.As Chegg looks to reinvent itself for the AI era, its story serves as a stark warning to the tech industry. The arrival of more powerful technology can make even a $15 billion company obsolete almost overnight.
