Chegg (NYSE:CHGG) stock is taking a beating on Tuesday as investors react to the American education technology company’s Q1 earnings report.
The big news in that earnings report is Chegg’s revenue outlook of $175 million to $178 million for the second quarter of 2023. That doesn’t have investors excited, and that makes sense when Wall Street’s revenue estimate is $193.64 million.
Another bit of news from the earnings report that has investors worried has to do with ChatGPT. Here’s what president and CEO Dan Rosensweig said about the artificial intelligence’s (AI) impact.
“In the first part of the year, we saw no noticeable impact from ChatGPT on our new account growth and we were meeting expectations on new sign-ups. However, since March we saw a significant spike in student interest in ChatGPT. We now believe it’s having an impact on our new customer growth rate.”
Chegg is looking to combat this with CheggMate. This is an AI chatbot powered by ChatGPT. The company hopes the AI will create a more “personalized, adaptive, accurate, fast, and effective” learning environment for students.
CHGG Q1 Earnings Results
The ChatGPT and revenue news are dragging down an otherwise solid earnings report. The company produced adjusted EPS of 27 cents and revenue of $187.6 million. These are both better than analysts’ estimates of 26 cents per share and revenue of $185.17 million even if both were down year-over-year.
CHGG stock is down 46.8% as of Tuesday morning.
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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
