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Chegg is under severe pressure, but the evidence does not show that ChatGPT alone sent its stock down more than 99%. The company reported a 39% revenue decline in 2025 and identifies generative AI—including ChatGPT—as a competitive threat. It also points to Google AI Overviews, falling website traffic and other pressures. Chegg has cut costs and is generating cash, but those steps have not yet demonstrated a recovery in revenue.
Is Chegg on its last legs?
“On its last legs” is a fair description of the scale of Chegg’s business challenge, not an established verdict that the company is about to shut down. Its 2025 revenue was sharply lower than the year before, and its academic-support business faces changes in how students find help. At the same time, Chegg reported positive free cash flow for the first half of 2026 after substantial cost reductions.
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The distinction matters: shrinking revenue and a collapsing share price are serious warning signs, while cost-cutting and cash generation can buy a company time. Neither establishes whether Chegg can build a durable business at its smaller scale. The company has chosen to remain independent and pursue a turnaround centered partly on professional skilling; that is management’s plan, not proof of its success.
Did ChatGPT send Chegg stock down 99%?
Chegg shares did fall more than 99% from a reported 2021 peak to a close of $0.74 on October 7, 2026. The dated closing price is from StockAnalysis, which cites S&P Global Market Intelligence and says its historical prices are split-adjusted. Yahoo Finance reported in May 2026 that the stock was more than 99% below a 2021 high of $108. That peak is secondary-source reporting, and the precise comparison can vary depending on whether it uses an intraday high or a closing price.
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That comparison describes the magnitude of the decline; it does not identify a single cause. Chegg’s 2025 Form 10-K says students increasingly use free and paid generative-AI services as alternatives for academic support, naming ChatGPT and similar products. The filing also identifies Google AI Overviews as a factor that can keep users on Google results and contribute to traffic and subscription headwinds. It discusses declining non-subscriber traffic, competition and enrollment trends as well.
Those disclosures support the conclusion that AI competition has hurt Chegg’s business. They do not quantify how much of the stock decline came from ChatGPT, separate from Google search changes or other business risks, and they do not establish that ChatGPT alone caused the overall collapse.
What happened to Chegg’s business?
Chegg’s annual results show a substantial contraction in revenue. The figures below are company-reported; net income or loss is a GAAP measure. Adjusted EBITDA is a non-GAAP measure.
| Period | Revenue | Net income (loss) | Other reported results |
|---|---|---|---|
| FY2024 | $617.6 million | $(837.1) million | Not stated for this comparison in Chegg’s 2025 Form 10-K |
| FY2025 | $376.9 million, down about 39% year over year | $(103.4) million | Not stated for this comparison in Chegg’s 2025 Form 10-K |
| Q4 2025 | $72.7 million, down 49% year over year | $(32.8) million | 57% gross margin; $12.9 million adjusted EBITDA (non-GAAP) |
| First half 2026 | Not stated in the cited Q2 2026 release figures | Not stated in the cited Q2 2026 release figures | $9.5 million free cash flow, including about $14.4 million in severance payments; Q2 adjusted EBITDA of $9.1 million, with a reported 17% margin (non-GAAP) |
The smaller net loss in FY2025 does not mean the underlying business was growing: revenue contracted by about 39%. The especially large FY2024 loss also reflected exceptional impairment charges, so comparing the two loss figures alone can give an incomplete picture.
The 2026 cash-flow and adjusted-earnings figures describe the effect of cost reductions, not a return to revenue growth. Free cash flow is not the same as GAAP net income, and adjusted EBITDA is a non-GAAP measure. The company said first-half free cash flow included about $14.4 million in severance payments.
How is Chegg responding?
Restructuring and a smaller cost base
In October 2025, Chegg announced it would eliminate 388 roles, about 45% of its workforce, as part of a restructuring. The Q2 2026 release described reduced expenses and positive free cash flow in the first half of that year. Such cuts can reduce cash outflows, but they do not by themselves show that customers or revenue are returning.
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Skilling, language learning and AI support
Chegg has reorganized around Chegg Skilling as a growth business and legacy Academic Services as a source of cash flow. Its stated areas of focus include workplace readiness, professional upskilling, language learning and continued AI-driven student support.
When it announced its strategy in October 2025, Chegg characterized the skilling opportunity as an approximately $40 billion market. It also said the relevant businesses were expected to generate approximately $70 million in 2025 and achieve double-digit growth in 2026. Those were company estimates and forward-looking expectations at the time, not verified results. The market-size figure is Chegg’s characterization, not an independently established estimate.
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Remaining independent
Chegg said its board completed a review of strategic alternatives and decided the company would remain independent. CEO Dan Rosensweig said on October 27, 2025: “As I return to the CEO role, I’m confident Chegg has a bright future, and I look forward to exploring all paths to drive growth and enhance shareholder value.” That statement expresses management’s outlook, not an independent assessment of the company’s prospects.
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Assessing whether the turnaround is working requires separating financial stabilization from business recovery. Useful signals include:
- Revenue: whether declines moderate or reverse, rather than being masked by a smaller expense base.
- Cash generation: whether free cash flow continues after restructuring costs and severance, alongside the company’s reported GAAP results.
- Customer and traffic trends: whether academic-support subscribers and website traffic stabilize as generative-AI tools and search changes compete for student attention.
- Skilling execution: whether the newer focus produces sustained growth, rather than relying on the projections Chegg made when it announced the plan.
- Company disclosures: Chegg’s Q2 2026 release lists AI competition, traffic and subscriber declines, execution and possible NYSE delisting among risks.
A share-price fall of more than 99% is not, on its own, a forecast of bankruptcy or a measure of what the stock will do next. The available company results establish substantial operating pressure and a cost-cutting response; they do not establish that the strategy will restore growth or that the shares are a buy or a sell.
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