Chegg used to sit at the center of online homework help. Now its market value has almost disappeared. Since ChatGPT launched in November 2022, the company’s valuation has dropped from about $14.7 billion in 2021 to nearly $115 million by April 2026.
The drop did not happen slowly over a decade. It came fast. Around three years. Most of it after generative AI tools became common among students.
A Company Built on Student Subscriptions
Chegg started in 2005. Osman Rashid and Aayush Phumbhra built it as a textbook rental platform. The idea came from a simple problem. College books cost too much.
Rashid, born in London and raised in Islamabad, studied electrical engineering in the United States. He later became CEO and pushed the company from a small student service into a major education platform.
At its peak, Chegg was more than rentals. It sold homework help subscriptions. Around $19.95 per month for access to millions of solved problems and expert answers. Students used it heavily during exam seasons.
Then the behavior shifted.
ChatGPT Changed the Flow
When ChatGPT arrived, the pattern broke. Students stopped waiting for subscription answers. They typed questions directly into AI tools and got explanations instantly. No login. No monthly fee.
Chegg noticed it early. In 2023, management confirmed a spike in ChatGPT usage among students. Soon after, the stock dropped almost 48% in a single day. Roughly $1 billion in value vanished in hours.
That moment set the tone for what followed.
Subscribers Started Leaving
The user base peaked at about 7.8 million subscribers. That number did not hold. By late 2024, it had fallen to around 3.6 million.
Revenue followed the same direction. Quarterly earnings dropped to nearly $143.5 million, down about 24% in one cycle. Full-year revenue for 2024 reached roughly $617.6 million, lower than the previous year.
Before all this, Chegg’s peak revenue sat near $776 million in 2021. The gap keeps widening.
Search Traffic Fell With It
Traffic data shows a similar pattern. Non-subscriber visits dropped close to 50% year over year by early 2025.
Students changed how they search. Instead of going to education websites, they started asking AI tools directly. Google added AI summaries on top of search results, too. That removed another entry point for Chegg.
The company later said Google’s AI feature hurt traffic almost as much as ChatGPT.
Big Layoffs and Cost Cuts
The pressure forced internal changes. Chegg cut hundreds of jobs. Around 636 employees were laid off across multiple rounds. Offices in the US and Canada were closed.
Convertible notes worth $117 million were repurchased to manage financial stress.
The company also shrank its operations to slow down cash burn.
From Growth Story to Sharp Decline
What makes Chegg’s case stand out is speed. Kodak, Nokia, and Blockbuster all declined, but over longer periods. Chegg’s drop happened in under four years.
Revenue loss, user decline, and stock collapse all moved together. By 2026, the stock traded near $1, with warnings about possible delisting from the New York Stock Exchange.
Pakistan-American Founder Behind the Early Rise
Osman Rashid played a major role in building the company. After leaving Chegg in 2010, he started Kno, an interactive textbook platform later acquired by Intel.
He later shifted focus to Pakistan, working on education initiatives like Khan Academy Pakistan and launching tourism projects such as Khoj Resorts. One of his ventures even appeared in National Geographic’s Luxury Collection in 2025.
His early work at Chegg helped shape the platform that later scaled globally, though the model did not survive the AI shift.
Revenue Model Under Pressure
The core issue sits in the product itself. Chegg sold structured answers. AI now gives those answers instantly and for free in most cases.
That removes the need for a subscription layer. Once that happens, pricing power drops fast. Retention drops with it.
Students moved quickly because the switching cost was almost zero.
Attempt to Shift Direction
Chegg is not exiting the market. It is trying to change direction.
The company is moving toward workforce training under “Chegg Skilling.” The target is the corporate learning market, estimated at around $40 billion.
The idea is to move away from student homework help and into professional upskilling programs.
Bigger Signal for Other Industries
Chegg is not the only company under pressure from AI. Similar risk sits in content writing, basic coding tasks, customer support, and legal research work.
Anything built on repeat answers is exposed. AI tools already handle large parts of that workload.
Chegg just became one of the clearest examples of how fast that shift can hit.
Closing View
The numbers tell the story without needing much interpretation. High valuation, fast growth, then a sharp break after AI tools became normal in student life.
The company is still operating, still adjusting. But the original model that made it valuable does not look the same anymore.
