Chegg CEO calls 48% inventory plunge over ChatGPT fears 'terribly overblown'

Chegg’s 48% stock price plunge on Tuesday, pushed by suggestions throughout the agency’s earnings report regarding the risks of artificial intelligence, was “terribly overblown,” CEO Dan Rosensweig knowledgeable CNBC Tuesday.

The shares rose as rather a lot as 8% in extended shopping for and promoting all through Rosensweig’s TV interview, which adopted the historic drop all through frequent market hours.

On Monday’s earnings title, Rosensweig acknowledged ChatGPT, the abruptly commonplace chatbot from startup OpenAI, was “having an affect on our new buyer development price.” The agency, which initially grew to turn into well-known for making a textbook rental model for college school college students, has expanded into homework and examination help merchandise.

Chegg acknowledged it was solely providing steering for the approaching quarter and by no means for the full yr because of it’s “too early to inform how it will play out.” Rosensweig reminded patrons, via the CNBC interview, that Chegg generates free cash flow into and earnings, on an adjusted basis, and has “greater than sufficient money to repay our debt.”

The agency moreover reported better-than-expected earnings and revenue for the first quarter.

“I feel that is terribly overblown, and I don’t usually say that, I don’t actually discuss in regards to the inventory value a lot,” Rosensweig acknowledged.

Chegg is slated to launch Cheggmate, its GPT-4 powered AI platform, in Could. Rosensweig acknowledged the combo of GPT and Chegg’s trove of instructional info might very properly be transformative.

Rosensweig well-known that ChatGPT struggles with delivering right options, a phenomenon generally called hallucination, and a problem throughout the tutorial world.

“College students can’t be incorrect after they do homework or after they study issues,” he acknowledged. “ChatGPT is commonly incorrect, and it’s not going to be proper anytime quickly.”

Originally posted 2023-05-03 16:40:10.