Chegg stock drops amid ChatGPT headwinds on education industry

Yahoo Finance Live looks towards Chegg shares following the rising popularity of OpenAI's ChatGPT bot.

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DAVE BRIGGS: My play is education technology company Chegg, C-H-E-G-G, a trending ticker on Yahoo Finance today. Shares under pressure today, given the recent rise of OpenAI's ChatGPT. BMO Capital analyst Jeffrey Silber says GPT could present some headwinds to subscriber growth in the current semester, adding the traffic has declined and looks to be worsening since the launch of ChatGPT. He is, however, keeping his market perform rating and $30 price target.

Meanwhile, Needham analyst Ryan MacDonald also downgrading Chegg to hold from buy, seeing, quote, "limited opportunity for acceleration, given the slowing growth in domestic subs." Shares off about a quarter over the last 12 months and falling another, as you can see big time, 16% on this news, Seana.

SEANA SMITH: Yeah, it'll be interesting to see whether or not we do see a drop in some of those renewal rates when it comes to Chegg because of ChatGPT. But I don't think you can argue with the fact that ChatGPT is something you need to keep your eye on.

We were just talking to Dan Ives earlier in the show. He was calling it a potential game-changer when it comes to AI, saying Microsoft is going to be a significant advantage compared to some of its peers because of their investment in OpenAI and ChatGPT's potential here in the future. So Chegg obviously could really bear the brunt to really be at a disadvantage if, in fact, this does take off. I don't know, though. It'll be interesting.

DAVE BRIGGS: Have you used it yet?

PRAS SUBRAMANIAN: I have here and there. Did you guys see that ChatGBT-- sorry, GPT?

DAVE BRIGGS: GPT.

SEANA SMITH: GPT.

PRAS SUBRAMANIAN: GPT just got past its medical licensing. So it's a three-part test that it-- it can actually diagnose--

SEANA SMITH: It can do anything!

PRAS SUBRAMANIAN: --some illnesses. So--

DAVE BRIGGS: It's coming for all of us, man.

PRAS SUBRAMANIAN: Chegg, me, you, doctors. I mean, who's next, right?

DAVE BRIGGS: They need a better acronym. They need to shorten the name of it. By the way, Yahoo Finance had a poll. Would you use an AR platform like GPT for writing content? 60% said yes, 60%.

SEANA SMITH: I'm actually surprised it wasn't higher than that, you know?

DAVE BRIGGS: Well.

SEANA SMITH: I don't know. All right, well, lots of questions that need to be answered when it comes to ChatGPT and what that would look like in the coming years.