- Students turning to ChatGPT says Chegg
- Virtual Learning sales for Pearson fall 14%
- IBM to replace jobs with AI
Shares in US educational technology firm Chegg (CHGG:NYSE) fell over 40% in pre-market trading at its CEO warned overnight of the impact of Open AI ChatGPT on its homeworking help business.
The news had a knock-on effect on UK-listed education publisher Pearson (PSON) which saw its shares fall 9.6% to 801.8p in sympathy.
Chegg said that students were increasingly turning to Open AI ChatGPT for help with studying rather than their services as it reported its first quarter earnings on 2 May.
Chegg’s total net revenues fell 7% year-on-year to $187.6 million, with subscription services revenues falling 3% year-on-year to $168.4 million or 90% of total net revenues, compared to 86% in first quarter of 2022.
EMBRACING THE AI CHALLENGE
Dan Rosensweig, CEO and president of Chegg, said: ‘As artificial intelligence technology continues to evolve at a rapid pace, we are embracing it aggressively and prioritising our investments to meet this opportunity.
‘We believe we are in the best position to take advantage of the advancements in AI for the benefit of students, because we can leverage our proprietary data, our 150,000 experts, and our decade-plus years of experience as we launch Chegg Mate.’
Chegg Mate is a new tool which will ‘harness the power of ChatGPT to make learning more personalised, adaptive, accurate, fast and effective – all in an easy-to-use conversational manner,’ said Rosensweig.
So, it might not be all over for the US edtech firm yet.
Chegg’s dramatic share price fall, however sent jitters across the pond.
PEARSON CAUGHT IN THE FALL-OUT
Although Pearson reported a strong set of first quarter results – a rise of 6% in underlying sales - ahead of expectations on 28 April, Virtual Learning sales decreased by 14%.
In the first quarter Virtual Schools declined 2%, supported by good retention rates and ‘the return of a school that had previously left, offset by enrolment declines for the 2022/23 academic year and lower district partnership renewals’.
IBM TO REPLACE JOBS WITH AI
International Business Machines Corp (IBM:NYSE) CEO Arvind Krishna told Bloomberg News on 1 May that it was to ‘pause hiring for roles’ within the next five years as ‘roughly 7,800 jobs could be replaced by AI.’
IBM’s hiring pause would affect back-office functions such as human resources, non-customer facing roles and administration, said Krishna.
LEARN MORE ABOUT PEARSON
Disclaimer: The author (Sabuhi Gard) owns shares in Pearson
