Chegg, a student-help platform active for two decades, saw a dramatic loss of subscribers and market capitalization after GPT-4 became widely available.

Background and peak valuation

For about 20 years, the company provided homework solutions and study aids that attracted a broad student audience and recurring subscriptions.

At its peak Chegg reached a market value near $12 B. The company’s share price then fell from $113.51 to $0.78, a drop of approximately 99%.

Impact of generative AI on demand

Following the release of GPT-4, users increasingly turned to free or lower-cost AI tools that generate answers faster, reducing the perceived need for paid Chegg subscriptions.

Subscriber counts declined by more than 500 K after GPT-4's launch, and the stock entered a prolonged downtrend as retention and growth metrics deteriorated.

Internal response and missed adaptation

Employees reportedly proposed that the company develop proprietary AI features to retain users, but those initiatives were not prioritized by management at the time.

The decision not to accelerate AI integration left Chegg exposed to competition from generative models and alternative study platforms adopting new automation tools.

Industry lesson

The case illustrates a broader dynamic in technology-driven markets: long-established products can lose market share quickly when competitors deploy superior automation or AI capabilities.

Firms facing rapid technical change must evaluate whether to build internal innovations or risk displacement by external solutions that meet user needs more efficiently.