What was once a pandemic-era success story has now turned into a clear example of how quickly artificial intelligence can reshape entire industries. Chegg, once valued at $14 billion, has seen a dramatic fall in market value within a short span.
At its peak in February 2021, Chegg’s stock traded at around $115, giving it a valuation of nearly $14.7 billion (about Rs 1.20 lakh crore). The surge was driven by remote learning demand, making the platform widely used by students. However, by late 2025 and April 2026, the stock dropped to nearly $1, with market capitalisation falling to just over $100 million. This sharp decline has led analysts to describe the company as being “wiped out” by AI.
The impact was also visible internally. In May 2025, Chegg laid off around 22% of its workforce after reporting a 30% drop in revenue and declining subscribers. Another round of layoffs followed in October 2025, affecting about 45% of employees. The company linked these decisions to the “new realities of AI.” Leadership changes were also made, with Dan Rosensweig returning as CEO and Nathan Schultz moving into an advisory role.
Chegg’s core model was based on paid academic answers. Students subscribed to access step-by-step solutions. However, AI-powered tools began offering similar answers instantly and often for free. This reduced the gap between paid and free services. At the same time, students started finding answers directly through AI-driven search, lowering traffic to platforms like Chegg.
The company attempted to adapt by introducing generative AI features and repositioning its offerings. However, these efforts struggled as general-purpose AI tools continued to improve rapidly and remained widely accessible. For many users, Chegg’s offerings did not feel significantly different from free alternatives.
Despite the term “wiped out,” Chegg is still operational and exploring areas like skills and language learning. However, most of the value created during its peak has been erased, and its original business model now requires major reinvention.
For startups, the case highlights a larger shift. Models built on selling access to information are becoming vulnerable. As AI delivers similar outputs at near-zero cost, companies must focus on delivering measurable outcomes, stronger workflows, or unique data.
The story also shows how AI is changing distribution. It is becoming the first point of interaction, reducing direct traffic to traditional platforms. Even strong products risk being bypassed.
Chegg’s journey stands as a real-time example of how fast disruption can happen in the AI era.
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