We are investigating whether Chegg, Inc. (NYSE: CHGG) (“Chegg”) has violated federal securities laws based on its disclosure on May 1, 2023, that the popular AI chatbot, ChatGPT is “having an impact on our new customer growth.”
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Why is there an investigation?
ChatGPT is an artificial intelligence (AI) chatbot that has garnered attention for its detailed and articulate responses to questions across many domains of knowledge.
On February 6, 2023, after the markets closed, Chegg held a conference call to discuss its results for Q4 2022. During the call, an analyst asked Chegg CEO Dan Rosensweig whether, as a result of ChatGPT, Chegg was “seeing any impact on [its] business in terms of new subscriber growth or returning subscribers.” Rosensweig responded, “No. Nothing at all that is noticeable. And obviously, we’re going to track it, but we’ve seen nothing.”
On April 17, 2023, Chegg announced the launch of CheggMate, a new AI enhanced learning service built on the most advanced model of ChatGPT (GPT-4). Chegg did not mention any impact that ChatGPT was having on new customer growth.
On May 1, 2023, after the markets closed, Chegg held a conference call to discuss its results for Q1 2023. On the call, Rosensweig stated that “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.”
Following this revelation, on May 2, 2023, Chegg’s stock price dropped 48.41% to close at $9.08, from a prior close of $17.60 on May 1, 2023.