Global Courant 2023-05-03 02:14:36
Chegg’The 48% drop in stock price on Tuesday, driven by comments in the company’s earnings report about the risks of artificial intelligence, was “extremely overstated,” CEO Dan Rosensweig told CNBC on Tuesday.
Shares rose as much as 8% in extended trading during Rosensweig’s TV interview, which followed the historic drop during regular market hours.
On Monday’s earnings call, Rosensweig said ChatGPT, the suddenly popular chatbot from startup OpenAI, had “an impact on our new customer growth.” The company, which initially became known for developing a model for renting textbooks for students, has grown into homework and exam aid products.
Chegg said it was only providing guidance for the coming quarter and not the full year because it’s “too early to say how this will play out.” Rosensweig reminded investors during the CNBC interview that Chegg generates free cash flow and income on an adjusted basis and “has more than enough cash to pay off our debt.”
The company also reported better-than-expected earnings and revenue for the first quarter.
“I think this is extremely exaggerated, and I don’t usually say that. I don’t really talk much about stock price,” Rosensweig said.
Chegg is slated to launch Cheggmate, its GPT-4 powered AI platform, in May. Rosensweig said the combination of GPT and Chegg’s trove of academic data could be transformative.
Rosensweig noted that ChatGPT struggles to provide accurate answers, a phenomenon known as hallucination, and a problem in academia.
“Students can’t be wrong when they do homework or learn things,” he said. “ChatGPT is often wrong, and it won’t be right anytime soon.”
ChatGPT’s price drop was ‘extraordinary’
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