Chegg Slashes 45% of Workforce, Blames AI Impact on Business

Chegg slashes 45% of workforce, blames 'new realities of AI'

Chegg said on Monday it would lay off about 45% of its workforce, or 388 employees, as the "new realities" of artificial intelligence and diminished traffic from internet search have led to plummeting revenue. The online education company, founded 20 years ago, has been hit by the rise of generative AI software tools, such as OpenAI's ChatGPT, which have become increasingly popular among students. Chegg also sued Google in February, arguing that AI summaries of search results have hurt its traffic and sales. The company reiterated that claim on Monday, saying AI and "reduced traffic from Google to content publishers" have damaged its business. "As a result, and reflecting the company's continued investment in AI, Chegg is restructuring the way it operates its academic learning products," the company said. The cuts come after Chegg in May laid off 22% of its workforce, citing increasing adoption of AI. Chegg went public in 2013 and saw its stock price hit a high of $113.51 in February 2021, boosted by the Covid pandemic and a shift to remote learning. The stock has since lost 99% of its value. Its market cap peaked at about $14.7 billion, before falling to roughly $156 million. The company offers textbook rentals, homework help and tutoring, as well as a newer suite of AI tools like a service that automatically generates flashcards. As part of Monday's announcement, the company said Dan Rosensweig will return as CEO effective immediately, replacing Nathan Schultz, who will step down from the role and remain as an executive advisor to Rosensweig and Chegg's board. Rosensweig, a former top executive at Yahoo who joined Chegg as CEO in 2010, stepped down from the post in April 2024, handing the job to Schultz, who was operating chief at the time. Chegg also said it plans to remain a standalone company, ending a strategic review process that began earlier this year. "After thoughtful consideration of multiple proposals, the board unanimously determined that remaining an independent public company offers the best opportunity to maximize long-term shareholder value," the company said. In April, Chegg was at risk of being delisted from the New York Stock Exchange. Chegg received the warning when the stock was trading at about 60 cents. Trading below $1 over a consecutive 30 trading-day period triggers a warning. By May, the stock was back over $1. -- CNBC's Ari Levy contributed to this report.

Chegg Lays Off Hundreds, Replaces CEO, All Because of AI

If you were a lazy college student during Covid, imagine a time traveler from five years in the future telling you that something kind of like Chegg is coming soonâ€"but this thing lets you be even lazier. In fact, in five years, Chegg will restructure its company completely because it's suffering so badly from competition with this new thing, this person says. You would probably ask Chegg to tell you why time travel is impossible, get an answer in fifteen minutes, and brush off this person as a lunatic. But as we all know, that thing is ChatGPT, along with other AI products like Google's AI overviews. A Chegg representative admitted as much on Monday, saying the "new realities of AI and reduced traffic from Google to content publishers have led to a significant decline in Chegg's traffic and revenue," according to Reuters. Between March of 2020 and January of 2021, the stock price of Chegg went up by 345%, according to a Forbes article. That piece notes that Chegg had two secret ingredients at the time: a searchable collection of 46 million textbooks that students could use to access instant answers during at-home tests and other assignments, and a workforce in India of "70,000 experts with advanced math, science, technology and engineering degrees," on call to answer queries from students within minutes. At the time, Chegg cost $14.95 per month. But as of November of last year, the stock price had gone down 99% from its peak, a plunge that caused $14.5 billion to disappear. The cause was clearly ChatGPTâ€"a fact so obvious that Chegg rolled out its own chatbot, but to no avail. In February of this year, Chegg filed a lawsuit against Google over AI Overviews, claiming that it provided Google with “proprietary content in order to be included in Google’s search function,†only to have that content mined by Google's AI function, all “without having to spend a dime.†Now, Chegg is eliminating 388 rolesâ€"which is 45% of the company's workforce according to the Reuters article, possibly because Chegg's vast legion of India-based experts ostensibly do not count as permanent employees who are subject to layoffs. The new CEO, Dan Rosensweig, is actually the company's old CEO from its more successful era. Chegg also apparently conducted a review about the possibility of going private or putting itself up for sale, but it's remaining public and bringing back its old CEO instead. It sounds like it's decided to live in the past and hope for a miracle.

Chegg Jumps Over 4% After-Hours As It Lays Off 45% Workforce, Blaming AI Amid New Restructuring Plan - Chegg (NYSE:CHGG)

Chegg Inc. (NYSE:CHGG) announced a massive restructuring plan on Oct. 27, 2025, that includes laying off 45% of its global workforce, or 388 employees. The company cited significant revenue declines from the "new realities of AI" as the primary driver for the move. Check out CHGG stock price here. Chegg Soars Over 4% After Announcing Restructuring Plan Investors reacted positively to the drastic cost-cutting measures. After closing the regular session at $1.44 apiece, Chegg's stock jumped $0.060, or 4.17%, in after-hours trading. The sweeping changes also include a leadership shakeup. Executive Chairman Dan Rosensweig will reassume the roles of President and Chief Executive Officer, effective immediately. Nathan Schultz, the current President and CEO, will transition to an Executive Advisor role. 'New Realities Of AI' Fueled Shakeup At Chegg In its official statement, Chegg directly blamed artificial intelligence and "reduced traffic from Google to content publishers" for a "significant decline in Chegg's traffic and revenue." The restructuring is intended to deliver its academic learning services with a "substantially lower cost structure." This workforce reduction is expected to slash 2026 non-GAAP expenses by approximately $100-$110 million. The company anticipates incurring $15-$19 million in charges, mostly related to cash severance payments for the dismissed employees. See Also: Alex Karp Says New Lumen Deal Can Make AI Data '200x Faster,' 'Incrementally Cheaper:' 'The Holy Grail For Businesses' CHGG Eyes $40 Billion+ Skilling Market Chegg stated that the new plan will generate increased cash flow to invest in what it calls its highest growth opportunity: the $40 billion+ skilling market. The company is pivoting to focus on its business-to-business (B2B) organizations, including its professional language learning platform Busuu and its AI-related skills courses. These businesses are projected to generate approximately $70 million in revenue in 2025. Chegg reiterated its revenue and adjusted EBITDA guidance for the third quarter of 2025. The company confirmed that additional details about the restructuring will be shared during its third-quarter 2025 earnings call on Nov. 10, 2025. Chegg Underperforms The Market In 2025 Shares of Chegg were down 14.29% on a year-to-date basis as compared to 17.15% gains in the S&P 500 index. The stock also declined by 15.79% over the year. It maintained a weaker price trend over short and medium terms but a strong trend in the long term, with a poor growth ranking. Additional performance details, as per Benzinga's Edge Stock Rankings, are available here. On Tuesday, the futures of the S&P 500, Dow Jones, and Nasdaq 100 indices were trading lower. Meanwhile, on Monday, the S&P 500 index ended 1.23% higher at 6,875.16, whereas the Nasdaq 100 index rose 1.83% to 25,821.54. On the other hand, Dow Jones advanced 0.71% to end at 47,544.59. Read Next: DoorDash's Most Active Dashers Are 'Unauthorized Workers:' Culper Shorts DASH Saying 10-11% Pay Raise Would 'Wipe Out' 2024 EBITDA Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: rafapress / Shutterstock.com CHGGChegg Inc$1.507.91%OverviewMarket News and Data brought to you by Benzinga APIs

Homework helper Chegg to slash 45% of workforce, bring back old CEO...

Online homework helper Chegg said Monday that it will slash 45% of its workforce and bring back its previous CEO as it grapples with the "new realities of AI," including reduced web traffic and revenue, following significant cuts earlier this year. The education site - which offers textbook rentals and tutoring - said it will cut 338 employees as Google's AI overviews squash web traffic and students flock to AI chatbots like ChatGPT. Also on Monday, the company said Dan Rosensweig will return as CEO effectively immediately - replacing his successor, Nathan Schultz, who will stay on as an executive advisor. Rosensweig, formerly Yahoo's chief operating officer, joined Chegg as chief executive in 2010. He stepped down in April 2024. "The new realities of AI and reduced traffic from Google to content publishers have led to a significant decline in Chegg's traffic and revenue," the company said in a statement Monday. "As a result, and reflecting the company's continued investment in AI, Chegg is restructuring the way it operates its academic learning products." Chegg also announced that it plans to remain a standalone company following a strategic review process that launched earlier this year. "After thoughtful consideration of multiple proposals, the board unanimously determined that remaining an independent public company offers the best opportunity to maximize long-term shareholder value," the company said. Chegg, which was founded 20 years ago, has attempted to keep up with the times, adding new tools to its site like AI-generated flashcards to help students study. But firms like OpenAI and Anthropic have offered discounts and deals on their language models to win over college students. In February, Chegg filed a federal antitrust lawsuit against Google, alleging its AI summaries have hurt site traffic and sales. Google has argued its summaries - which automatically populate at the top of search results - send web traffic to "a greater diversity of sites." The latest cuts are expected to save Chegg between $100 million and $110 million, and result in charges of approximately $15 million to $19 million. The company already slashed 22% of its workforce in May, blaming the cuts on the rise of AI. At the time, it announced plans to shutter its physical offices in the US and Canada by the end of the year, as well as cut back on new product development and reduce administrative costs. In April, the New York Stock Exchange warned Chegg that it was at risk of being delisted as its stock traded at about 60 cents. Firms receive a warning when trading below $1 for 30 days in a row. The stock jumped back over $1 by May. Shares in Chegg fell 1% premarket Monday. The stock has dropped about 14.3% so far this year.