Online education company Chegg has lost 99% of its market value since ChatGPT’s November 2022 launch. The stocks plummeted from a $14.7 billion valuation in February 2021 to approximately $115 million in April 2026 as artificial intelligence-powered tools made its paid homework-help service obsolete.
Chegg was co-founded in 2005 by Pakistani-American entrepreneur Osman Rashid alongside Indian-American Aayush Phumbhra as an online textbook rental service inspired by Netflix’s business model. Rashid, born in London and raised in Islamabad as the son of a Pakistani diplomat, came to the United States in the 1990s to study electrical engineering at the University of Minnesota. He served as CEO from 2005 to early 2010, building the company from a student classifieds board into a billion-dollar education technology giant before leaving to found Kno, an interactive textbook platform later acquired by Intel. Rashid has since returned to Pakistan, where he chairs Khan Academy Pakistan and founded Khoj Resorts, which became the first Pakistani hotel featured in National Geographic Magazine’s Luxury Collection in 2025.
The homework assistance platform that once charged students $19.95 monthly for access to 79 million expert-verified solutions now trades at around $1 per share, having received a delisting notice from the New York Stock Exchange.
The company’s collapse represents the fastest documented case of generative AI disruption, occurring over just 39 months compared to five-to-ten-year decline timelines seen with Kodak, Blockbuster and Nokia. Subscriber counts crashed from 7.8 million at peak to 3.6 million in the fourth quarter of 2024, a 21% year-over-year decline, while quarterly revenue fell 24% to $143.5 million according to SEC filings.
Then-CEO Dan Rosensweig publicly acknowledged the threat on May 2, 2023, telling analysts that Chegg observed a significant spike in student ChatGPT interest starting in March, triggering a 48% single-day stock crash that wiped out $1 billion in market capitalization. Full year 2024 revenue fell 14% to $617.6 million with a staggering net loss of $837.1 million, while annualized 2025 revenue is estimated around $290 million based on fourth quarter run-rates representing a 63% drop from the $776 million peak in 2021.
Non-subscriber traffic collapsed 49% year-over-year by January 2025, while survey data showed college students planning to use Chegg dropped from 38% to 30% as ChatGPT usage intentions rose from 43% to 62%.
Google’s AI Overviews feature delivered a second blow by generating answers directly in search results, with current CEO Nathan Schultz telling investors the feature was “as material” to Chegg’s decline as ChatGPT itself. No surprise there that it even prompted an antitrust lawsuit against Google.
The corporate response included brutal restructuring with 636 employees laid off in two rounds over six months representing 67% of workforce, closure of all United States and Canada offices, and $117 million in convertible note repurchases.
Traffic metrics deteriorated sharply with non-subscriber visits declining 8% in the second quarter of 2024, 19% in the third quarter, and 37% year-over-year in October alone.
The company is pivoting toward workforce training under the Chegg Skilling brand targeting the $40 billion corporate training market through business-to-business partnerships. Industry analysts warn that Chegg’s collapse carries implications for European edtech, content publishing, customer service, paralegal services and junior coding sectors facing similar AI disruption threats.
