OpenAI’s ChatGPT is shaking up the edtech markets

Edtech shares company Chegg fell off a cliff this week after the company reported Q1 results that beat analyst expectations.

But the first quarter results did not cause the company to lose nearly half of its value. In the earnings call, the company’s executives noted that ChatGPT’s ability to add new subscribers not only potentially slowed growth, but also created uncertainty about its ability to forecast its future financial results.

It’s a particularly tense acknowledgment of competition given that Chegg just announced last month that it’s building a GPT-4 chatbot, even citing OpenAI CEO Sam Altman in the release.

Chegg’s dramatic post-earnings valuation flop won’t be the last time we see new AI tools rushing headlong into existing companies. But it’s one of the most dramatic cases to date and raises more questions than just what lies ahead for Chegg himself – and edtech more broadly. AI is the elephant in the room of any industry: how do startups react, especially when a publicly traded company readily admits that a leading product is slowing growth?

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