Chegg CEO Calls 48% Stock Plunge Over ChatGPT Fears ‘Extraordinarily Overblown'

In an interview with CNBC’s Jon Fortt, Chegg CEO Dan Rosensweig said that a stock drop of 48% caused by ChatGPT was "extraordinarily exaggerated".

Chegg warned on Monday night that ChatGPT could potentially affect Chegg's growth rate for new customers.

Chegg stated that they only provided guidance for the next quarter, as it is "too soon to know how this will unfold."

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Dan Rosensweig, CEO of CNBC, said that the fears about artificial intelligence expressed in the company's quarterly earnings report were "extraordinarily exaggerated" on Tuesday.

After the historic fall during regular trading hours, shares of Rosensweig rose up to 8% during extended trading.

Rosensweig stated on Monday's earnings conference call that ChatGPT, a chatbot developed by startup OpenAI and suddenly very popular, "had an impact" on the new customer growth rate. The company has expanded its product line, which was initially known for creating a textbook-rental model for college students.

Chegg stated that it would only provide guidance for the next quarter, not the entire year. It's just "too soon to know how things will turn out." Rosensweig told investors in the CNBC interview that Chegg has "more cash than we need to pay our debt."

The company's earnings and revenues for the first three months of this year were also better than expected.

Rosensweig stated, "I don't usually say that. I don’t talk much about the stock prices."

Chegg will launch Cheggmate in May, an AI platform powered by GPT-4. Rosensweig stated that the combination of GPT with Chegg's academic data could transformative.

Rosensweig pointed out that ChatGPT has a difficult time delivering accurate responses, a phenomenon called hallucination and a major problem in academia.

He said that students cannot be wrong when doing homework or learning new things. "ChatGPT often gets it wrong and won't be getting it right any time soon."