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Chegg, once a darling of the online education boom, is laying off nearly half of its employees as the company struggles to stay afloat in an era reshaped by artificial intelligence and collapsing web traffic. The company announced on Monday that it would cut about 45% of its workforce—roughly 388 employees—saying the “new realities” of AI and declining visits from Google have severely damaged its business. The layoffs mark Chegg’s second major round of cuts this year, following a 22% staff reduction in May. “The restructuring will result in a reduction of 388 roles globally, or approximately 45% of the workforce. These actions will materially reduce 2026 non-GAAP expenses by approximately $100-110 million and result in expected charges of approximately $15-19 million, representing mostly cash severance payments,” Chegg said in a news release. Chegg, founded two decades ago as a textbook rental service, grew into a household name for students looking for homework help and study tools. But the rise of generative AI tools such as OpenAI’s ChatGPT has eaten into that market, allowing students to get instant answers without ever visiting Chegg’s site. The company even sued Google earlier this year, arguing that AI summaries in search results have siphoned away traffic and sales from content publishers like itself. “As a result, and reflecting the company’s continued investment in AI, Chegg is restructuring the way it operates its academic learning products,” the company said in a statement. The collapse has been swift. Chegg went public in 2013 and hit its peak during the pandemic, when remote learning sent its stock soaring to $113.51 in February 2021, giving it a market value of about $14.7 billion. Today, that same company is worth roughly $156 million—a staggering 99% loss in value. The company’s struggles have mirrored the broader impact of AI on traditional information platforms. Publishers, educators, and software firms that once thrived on search traffic are now watching users shift to conversational AI tools that bypass their content entirely. In a sign of just how serious things have become, Chegg announced that its longtime leader, Dan Rosensweig, is returning as CEO effective immediately, replacing Nathan Schultz, who will remain as an executive advisor. Rosensweig, a former Yahoo executive, first took over Chegg in 2010 and helped steer it through its IPO. He stepped down in April 2024, handing the reins to Schultz, who now exits amid the company’s sharp downturn, CNBC reported. Chegg also said it plans to remain independent after exploring potential strategic options. “After thoughtful consideration of multiple proposals, the board unanimously determined that remaining an independent public company offers the best opportunity to maximize long-term shareholder value,” the company said. Earlier this year, Chegg faced the possibility of being delisted from the New York Stock Exchange after its stock traded below $1 for 30 consecutive trading days. It managed to regain compliance by May, climbing slightly above the $1 mark. Chegg’s future now depends on whether it can reinvent itself fast enough to survive the AI era. The company is betting on its own AI tools—like automatic flashcard generation—to keep students engaged. But as more learners turn to free AI assistants for help, the question remains whether a company built for the old internet can adapt to the new one.
