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Chegg Explained: From Homework Hero to AI Roadkill?
What Chegg Actually Does
Chegg is basically the Swiss Army knife of student procrastination. At its core, Chegg started in 2005 as an online textbook rental service, trying to be “Netflix for textbooks” (back when Netflix still mailed DVDs). Over time, it evolved into an education support platform offering:
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Textbook Rentals & Sales – cheaper than buying that $300 biology doorstop at the campus bookstore.
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Chegg Study – subscription access to step-by-step textbook solutions and expert Q&A. In plain English: “Here’s the homework answer, kid.”
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Chegg Writing – grammar checks, plagiarism scans, and citation formatting.
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Chegg Math Solver – scan a math problem, get the solution. (AKA “Sorry Professor, the dog ate my work, but Chegg burped it back up.”)
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Chegg Tutors (now phased out) – live tutoring sessions, though never as popular as the homework-answer pipeline.
Today, Chegg is a subscription business. Most of its revenue doesn’t come from slinging textbooks anymore, but from the $15–$20 monthly subscriptions students pay to unlock homework help, study guides, and test prep.
How Chegg Makes Money
Chegg’s model is simple and kind of genius:
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Hook ’em with textbooks – Textbooks used to be the entry point. Buy or rent from Chegg, then upsell services.
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Subscriptions are king – The bulk of revenue now comes from Chegg Services (Study, Writing, Math Solver). As of 2022–2023, ~75–80% of revenue was subscription-based.
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Global expansion – U.S. college students were the core audience, but Chegg has pushed abroad to tap international students.
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Margin game – Services are high-margin. Textbooks are low-margin. The more they tilt toward services, the more profitable it looks on paper.
In short: Chegg monetizes student stress and deadlines. The worse you are at time management, the better Chegg’s earnings call sounds.
Why Investors Are (Rightly) Bearish
Here’s where the fun ends for Chegg. The company has had a rough ride since AI hit the mainstream. The stock fell off a cliff in 2023 when Chegg admitted ChatGPT was eating its lunch. And that problem isn’t going away.
1. AI Can Basically Do My Homework
Why pay $19.95/month for Chegg when ChatGPT can explain, solve, and even write essays for free? Sure, professors are adapting and AI answers aren’t perfect, but the value gap is enormous. Chegg’s moat has sprung a leak.
2. Growth is Stalling
Subscriber growth slowed as AI alternatives exploded. Chegg reported declining user growth in 2023–2024, signaling that the “pandemic golden era” of online study help is over. If your entire business depends on stressed freshmen, and freshmen now have a robot tutor in their pocket, that’s a problem.
3. Trust & Academic Integrity Issues
Let’s be real: Chegg isn’t just “helping students learn”—it’s widely used for cheating. That brand association makes it vulnerable as universities crack down on academic dishonesty. AI makes it even harder for Chegg to defend its “we’re here to help, not cheat” narrative.
4. Competition Everywhere
Chegg isn’t fighting just AI. Free resources like Khan Academy, YouTube, Quizlet, and Reddit’s army of unpaid tutors erode the need for a paid subscription. When your competition is both free and beloved, that’s bad news.
5. Valuation vs. Reality
Chegg used to be priced like a growth stock. Now? It looks more like a melting ice cube. Even if it pivots into AI (they’ve announced partnerships and AI integrations), why would students trust Chegg’s “AI-powered study buddy” when ChatGPT, Claude, or Perplexity already exist—and improve weekly?
The Final Grade: Chegg’s Report Card
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Business Model: Smart, subscription-driven, high margin (B+).
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Growth Outlook: Post-AI apocalypse, yikes (D).
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Competition Risk: Existential (F).
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Stock Thesis: Bearish until proven otherwise.
Chegg was built for the pre-AI college experience, where information was scarce, deadlines were hard, and textbooks were expensive. In 2025, information is abundant, AI is free, and professors are rethinking assignments.
Chegg isn’t dead yet—but unless it reinvents itself beyond being “the homework helper,” it risks becoming the next Blockbuster. Except instead of VHS tapes, it’s dusty old Econ 101 solutions.
DISCLAIMER: This analysis of the aforementioned stock security is in no way to be construed, understood, or seen as formal, professional, or any other form of investment advice. We are simply expressing our opinions regarding a publicly traded entity.
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