Chegg stock falls on shrinking sales, weak outlook

Yahoo Finance Live anchors discuss Chegg earnings, CEO Dan Rosensweig’s remarks on ChatGPT and AI, as well as the outlook for the stock.

Video Transcript

- And the third thing you need to know today, education company, Chegg, out with its latest earnings. It beat on the top and bottom lines last quarter, but it posted a weak outlook for the year, that left investors and analysts disappointed. On the earnings call, Chegg CEO, Dan Rosensweig, didn't seem to sweat the threat of AI platforms like ChatGPT. And this comes after we talked to him about this at the World Economic Forum in Davos about the outlook for artificial intelligence and the impact on Chegg.

DAN ROSENSWEIG: There's a lot of questions around AI that have to be asked. Legal questions, ethical questions, who owns this, who owns that. But in the interim, as it relates to Chegg, we will and continue to use it to enhance what we offer. Categories that we're not particularly deep in that we also want to provide inside our service. But I think we'd all agree, after using ChatGPT, even as extraordinary as it is and even as the evolution that's going to come, it still needs human editors.

- And he talked about that on the call as well. He was asked a lot about it on the call about ChatGPT, and again, sort of said, this is something that we are going to use not something that is going to threaten us. And indeed, a lot of businesses are beginning to integrate ChatGPT, but clearly the market is concerned about the business overall.

- I think, at least today, the market is concerned, I think, on that outlook. Very back-end weighted, so it really hinges, I think, on Chegg continuing to rebound, getting more new folks on the platform. And then also just driving deeper development amongst the students already in schools. And Brad, we've had just a fundamental shift in how people learn and study because of the pandemic. And Chegg is still, I think, feeling the aftershocks of that major upheaval.

- I think for what they said on the call, to your point, Julie, saying that we have been leveraging these technologies within our platform for years, we believe continued advancements will benefit Chegg and students. And been using ChatGPT, or excuse me, GPT2 inside of their writing products there. Have been in some instances or another, the elements of artificial intelligence.

And everything from some of the Microsoft Suite products that you may use on a day in, day out basis, even into the Google Cloud suite. But we may not necessarily label it as artificial intelligence. We just know that it simplifies some of the processes very quickly. Whether that's, hey, can you create a spark notes edition of everything that I've just written within this, and highlight the main takeaways. That's an artificial intelligence component.

More of that is coming mainstream now, and we have now it being baked into everything. From our search engines to the cloud servers that we may not necessarily know how they operate, but it's going to be within that framework. All this to say that the language itself of artificial intelligence is changing and becoming smarter. And within that language, I think that's exactly where it could become more personalized. And everything from Ed Tech that we're hearing about from Chegg, it's just a matter of how quickly they're able to innovate on top of what they've already infused within some of their products.

- Yeah. Exactly.