Chegg Collapse: How AI Wiped Out a USD 14.7 Billion US EdTech Giant As Stock Crashes Below USD 1

Chegg, once a dominant force in online education, is now being cited as one of the clearest examples of how artificial intelligence can disrupt and dismantle an entire business model. The American edtech firm, which surged during the Covid-era boom in 2021, has seen a dramatic fall from a peak market capitalisation of USD 14.7 billion to nearly USD 156 million within just a few years.

At its height in February 2021, Chegg’s stock traded at USD 113.51 per share, fuelled by massive demand for remote learning solutions. However, the company’s valuation has since collapsed by nearly 99 percent. At the time of writing, Chegg’s stock price has fallen to just USD 0.99, highlighting the severity of its decline. KPMG Layoffs: Firm To Cut 10% of US Audit Partners After Retirement Push Falls Short.

The company is now preparing to release its first-quarter 2026 earnings results on May 6, covering the period ending March 31. Its previous financials already painted a grim picture. In its fourth-quarter 2025 report, Chegg posted total net revenues of USD 72.7 million, marking a steep 49 percent year-over-year drop.

A major factor behind this downturn has been the rapid rise of generative AI tools such as ChatGPT. These platforms have fundamentally changed how students access information, offering instant answers, explanations and even essay-writing assistance for free. As a result, many users who once paid for Chegg subscriptions have migrated to AI-driven alternatives. Axis Bank Layoffs: Axis Bank’s Employee Headcount Drops by 3,000 in FY26 As Tech Investments Boost Productivity.

Acknowledging the shift, Chegg announced in October that it would lay off 45 percent of its workforce, affecting 388 employees. The company admitted at the time, “The new realities of artificial intelligence... have led to plummeting revenue.”

Beyond AI chatbots, Chegg is also facing pressure from Google. The company has filed a lawsuit against the tech giant, alleging that AI-generated summaries displayed in search results are diverting traffic away from its platform. By providing direct answers on search pages, these summaries reduce the need for users to visit third-party websites like Chegg.

The combined impact of AI chatbots and search engine innovations has left Chegg’s traditional business model struggling to remain relevant. The company even risked being delisted from the New York Stock Exchange after its stock remained below USD 1 for an extended period, though it briefly recovered above that threshold in May.

As Chegg attempts to adapt to the AI-driven landscape, its rapid decline serves as a cautionary tale for the global tech industry. The company’s fall underscores a stark reality: even well-established, multi-billion-dollar businesses can be rendered obsolete almost overnight by transformative technologies.

(The above story first appeared on LatestLY on Apr 26, 2026 10:48 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).