The Machine That Printed Money

For over a decade, Chegg operated an elegant EdTech business model. Students Googled homework help, found Chegg's answers, and subscribed for $20 monthly. With 130 million questions in their database, Google's algorithm reliably funneled desperate students to their paywall. Revenue hit $716 million in 2023.

Then ChatGPT changed everything. Students stopped Googling and started asking AI directly—getting instant, free answers often better than Chegg's. Revenue dropped 14% to $618 million in 2024. By Q3, quarterly revenue fell to $78 million, down 42% year-over-year. The company recorded $837 million in losses from writing down assets that were suddenly worthless.

The Death Spiral Accelerates

Google's algorithm changes cut Chegg's organic traffic by 50%. CEO Dan Rosensweig returned in October 2024, now talking about "milking the legacy business" while pivoting to Chegg Skilling—job training and corporate language learning through their Busuu acquisition. It generated $70 million in 2024, growing at 14%. The pitch: corporate training doesn't compete with ChatGPT like homework help does.

The Math That Doesn't Add Up

Chegg's targeting perhaps $280 million total revenue in 2025. Skilling represents $70 million—just 25%. Even if it grows 20% annually for five years, that's maybe $175 million by 2029 while legacy collapses. The entire company is worth less than one quarter's revenue from peak years.

Restructuring cut 400 employees (40% of workforce) and slashed operating costs from $536 million to under $250 million. With $112 million cash but only $49 million net of debt, they have two years to prove the pivot works.

A Cautionary Tale

The bull case requires believing a $70 million B2B training business can replace a $700 million consumer empire. It requires ignoring that corporate training is crowded and Chegg's brand screams homework cheating, not professional development.

More likely, we're watching textbook disruption in slow motion. Chegg will milk remaining students who haven't discovered ChatGPT works better. Skilling grows modestly but never at scale. Eventually they get acquired for parts, go private at distressed valuations, or fade into irrelevance.

When professors teach AI disruption, Chegg will be Exhibit A—proof that when your product becomes free and better elsewhere, no pivot saves you fast enough. The clock isn't starting to tick. It's already run out.