ChatGPT wiped nearly $1 billion off Chegg in a day: the edtech's 49% stock crash in 2023 and its AI-driven 45% workforce cut in 2025

Verification status: CHECKING — every figure is quoted verbatim from Chegg’s own SEC filings and independent press (The Register, Fortune, CNBC). Not yet a green badge; the checker grades it.

The problem

Chegg sells subscription homework help and textbook services to students. Its problem was not a product it deployed but a product someone else did: a free, general-purpose chatbot that does much of what students had paid Chegg to do. The company was blunt about the timing, and the admission is a first-party record: it appears in the CEO’s prepared remarks filed with the SEC as an exhibit to Chegg’s 2 May 2023 Form 8-K. In the first months of 2023 it “saw no noticeable impact from ChatGPT on our new account growth and we were meeting expectations on new sign-ups,” but that changed abruptly: CEO Dan Rosensweig told investors that “since March we saw a significant spike in student interest in ChatGPT” and that the company “now believe[d] it’s having an impact on our new customer growth rate” (source). Independent press carried the same quote from the earnings call (source). The admission is what made the story: an incumbent naming a specific generative-AI tool as the cause of a measurable slowdown in its own business (source).

What was built

There is no Chegg-built AI system at the centre of this case; the systems doing the damage were built by others. The first was OpenAI’s ChatGPT, which students used in place of paid study tools, and which Rosensweig described as driving the March 2023 spike in student interest that hit new sign-ups (source). The second, named later, was Google’s AI Overviews. In its 27 October 2025 restructuring announcement Chegg stated that “the new realities of AI and reduced traffic from Google to content publishers have led to a significant decline in Chegg’s traffic” (source). Chegg’s own response was to try to build with the same technology, announcing a GPT-4-based service, but the record verified here is the harm to its business, not the efficacy of that response (source).

The outcome

The market reaction in 2023 was immediate and severe, and it is visible in the exchange record itself: CHGG closed at $17.60 on 1 May 2023 and at $9.08 on 2 May 2023, a single-day close-to-close fall of about 48%, having traded as low as $8.72 intraday, roughly 50% below the prior close (source). The press reported the move at the same magnitude: The Register wrote that “Chegg’s stock price plummeted 49 per cent on Tuesday, wiping nearly $1 billion off its market valuation, after the education technology biz blamed a slowdown in subscriptions on ChatGPT” (source). Fortune carried the same magnitude, reporting that shares “tumbled to between $8.70 and $8.95 in midday trading on Tuesday” (source), and CNBC headlined its coverage “Chegg drops more than 40% after saying ChatGPT is killing its business” (source).

By 2025 the damage had moved from share price to headcount, and Chegg documented it in its own SEC filings. On 12 May 2025 the company disclosed that “a reduction of our global workforce … is expected to impact 248 employees, or approximately 22% of our current workforce” (source). Five months later it went much further: on 27 October 2025 it announced that “the restructuring will result in a reduction of 388 roles globally, or approximately 45% of the workforce,” expected to “materially reduce 2026 non-GAAP expenses by approximately $100-110 million” (source). Independent press tied both cuts to AI: CNBC reported that “Chegg said on Monday it would lay off about 22% of its workforce, or 248 employees … as students increasingly turn to AI-powered tools such as ChatGPT” (source).

The underlying business decline was on the same scale. CNBC reported Chegg’s first-quarter 2025 results: “subscribers declined 31% in the period to 3.2 million. Revenue declined 30% to $121 million, as its subscription services revenue fell by nearly a third to $108 million” (source).

Weakest load-bearing source. Every critical claim here now rests on a primary record: the 2023 stock move on the exchange price record (market data), the CEO’s ChatGPT attribution on Chegg’s own SEC-filed prepared remarks, and the 2025 workforce cuts on Chegg’s own 8-K filings, with independent press (The Register, Fortune, CNBC) corroborating each. The two genuinely weaker points are non-critical. The Q1 2025 subscriber (-31% to 3.2 million) and revenue (-30% to $121 million) figures rest here on a single independent source (CNBC) citing Chegg’s earnings report, not the primary 10-Q; nothing load-bearing depends on them alone. And the 2 May 2023 price data is quoted from Yahoo Finance’s market-data feed, an aggregator of the exchange record rather than the exchange direct, though it agrees with the intraday range independently reported by Fortune. No confirmation was sought from Chegg; every source is an already-public filing, market record, or news report.

How this was verified. Method: every load-bearing figure is quoted verbatim from a source fetched, grepped and saved to sources/ this session. The 2 May 2023 price fall is taken from the exchange price record itself, CHGG’s daily closes of $17.60 (1 May) and $9.08 (2 May) with an $8.72 intraday low, quoted from Yahoo Finance’s market-data feed (Tier 1 market data; saved to sources/yahoo-finance-chgg-daily-2023-04-26_05-04.json, Wayback 20260902085843), and corroborated by The Register’s “plummeted 49 per cent, wiping nearly $1 billion” (Tier 2; saved to sources/theregister-chegg-2023-05-02.html, Wayback 20250907093851), Fortune’s “$8.70 and $8.95” intraday (Tier 2; Wayback 20260806201902) and CNBC’s “more than 40%” headline (Tier 2; saved to sources/cnbc-chegg-chatgpt-2023-05-02.html, Wayback 20230502123410). CEO Rosensweig’s ChatGPT attribution is quoted from his prepared remarks filed as an exhibit to Chegg’s 2 May 2023 Form 8-K (Tier 1, first party; saved to sources/sec-8k-chegg-q1-2023-prepared-remarks-2023-05-01.htm, Wayback 20260902085716) and corroborated verbatim by CNBC and The Register. The 2025 restructurings, 248 roles / approximately 22% (12 May 2025), 388 roles / approximately 45% and the $100-110 million 2026 expense reduction (27 October 2025), and the “new realities of AI” attribution, are quoted from Chegg’s own SEC 8-K filings (Tier 1, first party; saved to sources/sec-8k-chegg-restructuring-2025-05-12.html and sources/sec-8k-chegg-restructuring-2025-10-27.html). The Q1 2025 subscriber (-31% to 3.2 million) and revenue (-30% to $121 million) figures are quoted from CNBC (Tier 2; saved to sources/cnbc-chegg-layoffs-q1-2025-05-12.html). sec.gov and the market-data feed bot-block default fetchers, so files were retrieved with a declared research user-agent. No confirmation was sought from Chegg. Checked 2026-09-02 (checking round 2).

Related case files

• Zillow shut down its iBuying business after its home-pricing algorithm mispriced, taking a $304m writedown and cutting 25% of staff — the closest analogue: an algorithm directly driving a large writedown and mass layoffs, told from the company’s own disclosures.
• Duolingo used generative AI to launch 148 new language courses in under a year — the same edtech beat from the winning side, a company leaning into generative AI to expand, useful for contrast with an incumbent it disrupted.
• Duolingo’s CEO walked back an ‘AI-first’ stance after backlash — another edtech reckoning with generative AI, where the outcome was a public reversal rather than a stock crash or layoffs.
• CNET quietly used an AI tool to write articles, then corrected 41 of 77 and paused the tool — a content/knowledge business whose brush with generative AI damaged trust, the same theme of AI eroding a business built on human-produced answers.

Sources

1. Chegg, Inc. (via SEC EDGAR) · Form 8-K, restructuring press release (388 roles / ~45% reduction; “the new realities of AI”) · 27 October 2025 · https://www.sec.gov/Archives/edgar/data/1364954/000136495425000112/a9901-pressreleasecheggtor.htm — Tier 1 (primary, first-party regulatory filing; the 388-role / ~45% workforce reduction, the $100-110 million 2026 expense reduction, and the “new realities of AI and reduced traffic from Google” attribution; sec.gov bot-blocks fetchers, retrieved with a declared research user-agent, saved to sources/sec-8k-chegg-restructuring-2025-10-27.html, Wayback 20251104222654).
2. Chegg, Inc. (via SEC EDGAR) · Form 8-K (248 employees / ~22% workforce reduction, 12 May 2025) · 12 May 2025 · https://www.sec.gov/Archives/edgar/data/1364954/000136495425000049/chgg-20250512.htm — Tier 1 (primary, first-party regulatory filing; the 248-employee / ~22% May 2025 reduction; saved to sources/sec-8k-chegg-restructuring-2025-05-12.html, Wayback 20250514124117).
3. The Register · Chegg blames revenue slip on ChatGPT, stock price halves · 2 May 2023 · https://www.theregister.com/2023/05/02/chatgpt_chegg_ai/ — Tier 2 (independent technology journalism; the “49 per cent” one-day crash, “nearly $1 billion” market-value loss, and CEO Rosensweig’s ChatGPT quote; saved to sources/theregister-chegg-2023-05-02.html, Wayback 20250907093851).
4. Fortune · Chegg’s shares tumbled nearly 50% after the edtech company said its customers are using ChatGPT · 2 May 2023 · https://fortune.com/2023/05/02/chegg-shares-tumble-students-fleeing-chatgpt-a-i/ — Tier 2 (independent business journalism; corroborates the crash, shares “between $8.70 and $8.95” intraday; saved to sources/fortune-chegg-2023-05-02.html, Wayback 20260806201902).
5. CNBC · Chegg drops more than 40% after saying ChatGPT is killing its business · 2 May 2023 · https://www.cnbc.com/2023/05/02/chegg-drops-more-than-40percent-after-saying-chatgpt-is-killing-its-business.html — Tier 2 (independent business journalism; carries the full verbatim earnings-call quote from CEO Dan Rosensweig; saved to sources/cnbc-chegg-chatgpt-2023-05-02.html, Wayback 20230502123410).
6. CNBC · Chegg to lay off 22% of workforce as AI tools shake up education tech industry · 12 May 2025 · https://www.cnbc.com/2025/05/12/chegg-to-lay-off-22percent-of-workforce-as-ai-shakes-up-education-tech-industry.html — Tier 2 (independent business journalism; corroborates the 248/~22% cut and reports Q1 2025 subscribers -31% to 3.2 million and revenue -30% to $121 million; saved to sources/cnbc-chegg-layoffs-q1-2025-05-12.html).
7. Chegg, Inc. (via SEC EDGAR) · Form 8-K, Exhibit 99.01 — Q1 2023 financial results and prepared remarks of Dan Rosensweig, CEO & President · 1 May 2023 · https://www.sec.gov/Archives/edgar/data/1364954/000136495423000067/a9901-financialresultsq120.htm — Tier 1 (primary, first-party regulatory filing; carries the CEO’s verbatim ChatGPT attribution, “no noticeable impact from ChatGPT … a significant spike in student interest in ChatGPT … having an impact on our new customer growth rate”; saved to sources/sec-8k-chegg-q1-2023-prepared-remarks-2023-05-01.htm, Wayback 20260902085716).
8. Yahoo Finance (market-data feed) · CHGG daily price history, 26 Apr–4 May 2023 · retrieved 2 May 2023 close · https://query1.finance.yahoo.com/v8/finance/chart/CHGG?period1=1682467200&period2=1683244800&interval=1d — Tier 1 (primary market data; CHGG daily closes $17.60 on 1 May 2023 and $9.08 on 2 May 2023, intraday low $8.72; an aggregator of the exchange record, corroborated by the intraday range in Fortune; saved to sources/yahoo-finance-chgg-daily-2023-04-26_05-04.json, Wayback 20260902085843).