OpenAI’s ChatGPT is shaking up the edtech markets

Shares of edtech company Chegg fell off a cliff this week after the company reported Q1 results that bested analyst expectations.

But Q1’s results aren’t what made the company lose nearly half of its value. In its earnings call the company’s executives noted that ChatGPT was slowing its ability to add new subscribers, not only potentially slowing its growth but also throwing uncertainty into its ability to predict its future financial results.

It’s an especially tense admission of competition, given that Chegg just announced last month that it is building a chatbot with GPT-4, even quoting OpenAI CEO Sam Altman in the release. 

Chegg’s dramatic post-earnings valuation flop will not be the last time that we see new AI tooling run headlong into existing enterprises. But it is one of the most dramatic cases to date and raises more questions than simply what is ahead for Chegg itself — and edtech more broadly. AI is the elephant in every sector’s room: How are startups reacting, especially when a public company readily admits that a leading product is slowing growth?