Shares in Chegg, a US-listed education provider, and Pearson, a London-listed textbook publisher, both fell today, with each losing nearly $1 billion (£803 million) in market capitalization after the former warned that students were using ChatGPT instead of its services.
Chegg, which provides services such as homework assistance, digital and physical textbook rentals, textbooks, and online tutoring, issued a trading update after US markets closed yesterday.
It stated that while the rise of generative AI had no impact on first-quarter results, that has altered in the last two months.
“We’ve seen a significant increase in student interest in ChatGPT since March,” Chegg added. “We now believe it’s having an impact on our new customer growth rate.”
While the company made numerous references to its plans to embrace AI in its update, the warning – one of the first of its kind from a large publicly traded company – alarmed investors. It was struck by strong selling in after-hours sessions, and when markets started on Wall Street today, its shares had dropped to $9.54, little over half of Monday’s closing, with Chegg’s market valuation plunging by about $1 billion.
Pearson, the world’s largest textbook publisher, was not hammered as hard in London, although its shares fell 13.4% to 772.6p.
Pearson announced on Friday that employee pushes to learn new skills had helped the company exceed its financial forecasts in the first months of the fiscal year.
