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

Chegg's Drastic Measures in the Face of AI Disruption

Chegg, the once-thriving online education company, has announced a massive restructuring plan in response to the growing impact of artificial intelligence on its business model. The company revealed that it would lay off 45% of its workforce, amounting to 388 employees, citing the "new realities of AI" as the primary driver for this decision 1

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The AI Challenge and Google's Role

Chegg has been grappling with the rise of generative AI tools like OpenAI's ChatGPT, which have become increasingly popular among students. The company also pointed to reduced traffic from Google to content publishers as a significant factor in its declining revenue 1

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. In February, Chegg filed a lawsuit against Google, alleging that AI summaries in search results have hurt its traffic and sales 2

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Leadership Shakeup and Strategic Review

As part of the restructuring, Chegg announced the return of Dan Rosensweig as CEO, effective immediately. Rosensweig, who previously led the company from 2010 to 2024, will replace Nathan Schultz, who will transition to an executive advisor role 3

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. The company also concluded a strategic review process, deciding to remain a standalone public company 4

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Financial Impact and Cost-Cutting Measures

The workforce reduction is expected to slash Chegg's 2026 non-GAAP expenses by approximately $100-$110 million. The company anticipates incurring $15-$19 million in charges, mostly related to severance payments 3

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. This move follows a previous 22% workforce reduction in May 2025, also attributed to the rise of AI 4

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Chegg's Market Performance and Future Outlook

Chegg's stock price has experienced a dramatic decline, losing 99% of its value since its peak in February 2021. The company's market cap has plummeted from about $14.7 billion to roughly $156 million 1

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. Despite these challenges, Chegg's stock jumped 4.17% in after-hours trading following the restructuring announcement 3

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Pivoting to New Opportunities

As part of its restructuring, Chegg is shifting focus to what it sees as its highest growth opportunity: the $40 billion+ skilling market. The company plans to invest in its business-to-business organizations, including its professional language learning platform Busuu and AI-related skills courses 3

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Chegg's drastic measures highlight the profound impact of AI on traditional online education models and underscore the need for companies to adapt quickly in the face of technological disruption.