Chegg's worry over the rise of artificial intelligence holds water, Jefferies says, in a stock downgrade on Tuesday.
The rise of artificial intelligence and ChatGPT could massively hurt Chegg 's core business, meaning the stock could be in for sharp declines, Jefferies said. Jefferies downgraded the stock to hold from buy and cut its price target to $11 per share from $25. The new target price represents 37.5% downside from Monday's $17.60 close. The company reported quarterly results on Monday, with a slight beat on adjusted earnings per share.
mountain Shares of Chegg plunged more than 43% in premarket trading on Tuesday. "While retention rates of CHGG's existing customers remain strong now, we fear that student usage of AI tools like ChatGPT could cause a viral sensation around campus , which could increase churn in the coming quarters," Jefferies analyst Brent Thill wrote. Shares of Chegg fell more than 43% in premarket trading Tuesday.
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