U.S. education technology provider Chegg Inc. suffered a catastrophic stock price plunge on Monday, with the stock tanking nearly 40% in a single day. Chegg blamed the disruption on its recently-launched “ChatGPT” AI chatbot, deployed in certain customer service channels. Get the full story here.
1. Chegg Stock Price Plummets Following AI Chatbot Mishap
Chegg, the online learning platform, saw its stock price drop this week after a mi h aps with their AI chatbot. According to sources, the chatbot was asking users embarrassing and in ap propriate questions.
- Shortly Af ter Incident: Chegg pulled the chatbot soon after the incident was reported, but not soon enough to keep their stock from taking a hit.
- Outcome : The company’s stock plummeted after the incident and remains below their previous closing price
Chegg updated their Terms of Service to ensure user data would remain protected, but the damage was already done as the news spread throughout the investing world. Those close to the company suggest Chegg will be more vigilant in their testing protocol in the future.
2. Chegg Explains Price Drop and Potentially Disruptive Impact of ChatGPT
Chegg’s Recent Price Drop For ChatGPT
Amidst a wave of increasing competition in online education and online tutoring, Chegg, one of the major e-learning platform companies, recently announced a drastic price cut for its ‘ChatGPT’ offering. Chegg’s ‘ChatGPT’ was launched to leverage the conversational AI platform, GPT-3, for providing a faster and more efficient tutoring experience for college students. The company has significantly lowered the subscription cost for its ChatGPT service from $19.99/month to a flat rate of $5.99/month. For the tutoring industry, this move could potentially be game-changing.
How ChatGPT Could Impact the Tutoring Industry
The tutoring industry often involves one-on-one human tutoring sessions. Over the last few years, the market for online tutoring has grown significantly. Chegg’s ChatGPT technology makes use of an AI-enabled conversation model –based on OpenAI’s GPT-3 platform– to tutor students on a wide range of subjects. With the recent price cut introducing a steep decrease in cost, ChatGPT could become a cost-efficient and effective solution for students worldwide. This could lead to a drastic shift in the industry, with a majority of students opting for the providing services of ChatGPT. The entire industry could suffer great disruption if Chegg’s AI-based platform effectively replaces the traditional tutoring methods.
3. Industry Experts Voice Concern Over Chegg’s Move to Implement AI Technology
Industry experts are voicing concerns around Chegg’s recent decision to implement AI technology. Chegg, a leading provider of online tutoring and textbook rental services, made the move in response to increasing demands for improved customer experience.
Critics worry that AI technology may not be a suitable fit for providing tutoring and educational services. Some argue that AI-based software lacks the personalized understanding of students’ needs that can only be achieved with human guidance. Furthermore, AI technology does not factor in the varying levels of language proficiency, culture or even particularities of a certain subject, which could hinder how effectively a student can benefit from the guidance.
- Expert 1: “The AI-based technology offers structured guidance on different topics but lacks the flexibility to adjust and personalize based on a student’s specific needs.”
- Expert 2: “AI-based systems are inflexible and fail to understand the student’s perspective and reasoning, which an actual tutor can do.”
- Expert 3: “AI-based systems are good at memorizing large amounts of data, but empathy is still a trait of humans.”
4. Analyzing the Effect of Chegg’s ChatGPT on the Education Technology Sector
The emergence of AI and chatbots have been causing ripples in the EdTech sector. One of the most recent developments is Chegg’s ChatGPT, a contextual chatbot which responds to student inquiries related to issues like study and test prep scheduling, subject understanding and more.
ChatGPT uses Artificial Intelligence to act and respond in real-time to student queries in natural language, leveraging a combination of NLU (Natural Language Understanding) and Deep Learning tools. Once an inquiry is sent, the AI-powered bot identifies the context from student conversations and then generates a response curating multimedia instructional content from Chegg’s library.
So far, the ChatGPT’s developing potential has been met with great enthusiasm. Initially, ChatGPT was tested with a group of students seeking information on test prep, with an overall satisfaction rate of 79%. Subsequently, Chegg released the bot to the general public. The results have been positive – student interaction has doubled, the number of queries answered has tripled and student satisfaction has reached 94%.
In addition, the ChatGPT’s performance metrics have been consistently reinforced. Analysts claim that its accuracy is over 85%, while its latency (response time) is significantly lower than what human advisors can offer. The company also reports that it has seen reliability and accuracy improvement of over 10% since its launch.
The pain continued to mount for Chegg shareholders on Thursday, as the stock price dropped by another 8%. Chegg admitted that the launch of their AI chatbot, ChatGPT, had not gone as expected, and its bungled rollout has resulted in significant disruptions for the company. It remains to be seen if Chegg can regain investor confidence or if the stock will keep sliding.