2nd May 2023 15:46
(Alliance News) - Shares in London-listed education publisher Pearson PLC plummeted on Tuesday as a major US rival warned that its finances were being hit by the popularity of ChatGPT.
California-based Chegg Inc said on Monday that the AI software was having an impact on how many students were signing up to its services.
Chegg's stock slumped 47% USD9.35 in New York on Tuesday. Pearson slumped 14% to 762.60 pence in London in negative read-across.
The hit has been so pronounced that the company withdrew its guidance for the full year and warned that second-quarter revenue will be significantly lower than what Wall Street analysts expected.
"We believe that generative AI and large language models are going to affect society and business, both positively and negatively, at a faster pace than people are used to," said Chegg Chief Executive Dan Rosensweig.
"Education is already being impacted and, over time, we believe that this will advantage Chegg.
"In the first part of the year, we saw no noticeable impact from ChatGPT on our new account growth and we were meeting expectations on new sign-ups. However, since March we saw a significant spike in student interest in ChatGPT. We now believe it's having an impact on our new customer growth rate."
Rosensweig said that while the company was not attracting customers as rapidly, those who had already signed up seemed to be sticking around.
"Fortunately, we continue to see very strong retention rates, suggesting that those students who already understand the value of Chegg continue to choose us and retain us at high rates," he said.
Later this month the business plans to launch a beta version of its own ChatGPT-powered systems.
source: PA
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