How Generative AI Just Killed Its First Big Company And Stock

Generative AI may now be the most effective example of mass personalization and its ability to change the economy. 

It is disrupting the online education market, which may be the first to suffer the effects, but will definitely not be the last. JL 

Stephen McBride reports in Risk Hedge:

It's a company called Chegg (which) offers online tutoring and textbook rentals by charging a subscription. It was a thriving business. From 2016 to 2022, the company grew subscribers from 1.5 million to 8.2 million. But then ChatGPT, the popular AI chatbot, burst onto the scene. Suddenly, everyone had access to their own private tutor… for free. Chegg's CEO warned AI is hurting its business. Its stock has plummeted 70% since ChatGPT launched in November. Overnight, Chegg’s business model became obsolete. AI is disrupting the entire education system

AI claims its first casualty

1. ChatGPT claimed its first casualty…

It’s a company called Chegg (CHGG).

Chegg offers online tutoring and textbook rentals by charging a subscription.

It was a thriving business. From 2016 to 2022, the company grew subscribers from 1.5 million to 8.2 million.

But then ChatGPT, the popular AI chatbot, burst onto the scene…

Suddenly, everyone had access to their own private tutor… for free.

Overnight, Chegg’s business model became obsolete.

Shares have fallen off a cliff over the last couple days as Chegg’s CEO warned AI is hurting its business.

Its stock has plummeted 70% since ChatGPT launched in November:

Chegg mentioned customers are using ChatGPT instead of paying for its study tools.

Per Reuters:

What’s the cost of students using ChatGPT for homework? For [Chegg], it could be nearly $1 billion in market valuation.

Chegg signaled the rising popularity of viral chatbot ChatGPT was pressuring its subscriber growth and prompted it to suspend its full-year outlook, sending shares of the company 47% lower in early trading on Tuesday.

I warned readers in this RiskHedge Report that AI is disrupting the entire education system from the ground up.

There are several other “ticking timebomb” education stocks like Chegg waiting to be killed by AI.

But there are also smart ways to profit from this huge shift. It has to do with what I call mass personalization, which was never possible before AI.