This $14 Billion Business Is Officially the First Company to Be Completely Wiped Out By AI
Once the darling of Wall Street, Chegg is a cautionary tale of what happens when AI makes your entire business model obsolete overnight.
There was a time when investors and students loved Chegg, the edtech company that helped with homework for $14.95 a month. Then generative AI showed up.
In February 2021, Chegg’s stock traded at $115 with a market cap of $14.7 billion. The COVID-19 pandemic had driven record demand for online education, and Chegg capitalized. But AI tools like ChatGPT and Claude offered instant answers for free, making Chegg obsolete.
The company tried to fight back with CheggMate, an AI chatbot trained on its proprietary homework database. The gambit failed. Chegg laid off 248 employees in May 2025 and 388 employees (45% of staff) in October 2025, blaming “new realities of AI.” Today, the stock trades at $1.02 with a market cap of $114.59 million. The company has struggled to stay above the $1 threshold and nearly got kicked off the New York Stock Exchange.
There was a time when investors and students loved Chegg, the edtech company that helped with homework for $14.95 a month. Then generative AI showed up.
In February 2021, Chegg’s stock traded at $115 with a market cap of $14.7 billion. The COVID-19 pandemic had driven record demand for online education, and Chegg capitalized. But AI tools like ChatGPT and Claude offered instant answers for free, making Chegg obsolete.
The company tried to fight back with CheggMate, an AI chatbot trained on its proprietary homework database. The gambit failed. Chegg laid off 248 employees in May 2025 and 388 employees (45% of staff) in October 2025, blaming “new realities of AI.” Today, the stock trades at $1.02 with a market cap of $114.59 million. The company has struggled to stay above the $1 threshold and nearly got kicked off the New York Stock Exchange.
