The first I ever heard about Chegg was in the spring of 2021, when I discovered that some students were posting the answers to my quiz questions on the Chegg platform — quiz questions that I had created myself, by the way. At that time, Chegg was a $12 billion company, and Chegg’s stock was trading at over $100 per share.
Instead of punishing my students, however, I decided to go after Chegg itself and its corrupt management team. I filed a complaint with the Federal Trade Commission (FTC), and I wrote a paper called “The Chegg Conspiracy” explaining why Chegg’s officers should be criminally prosecuted for wire fraud. As it happens, I will be presenting my paper this weekend at the annual meeting of the Southeastern Academy of Legal Studies in Savannah, Georgia (#SEALSB2021). But this update doesn’t have to do with my paper; instead, it’s about Chegg itself.
When I first posted the original draft of my Chegg paper to SSRN on August 25, 2021, Chegg’s stock price had gone down to $80. A few weeks later (September 13, 2021), a major multinational publishing company called Pearson initiated a copyright infringement lawsuit against Chegg in the U.S. District Court for the District of New Jersey, and since then, Chegg’s shares have steadily declined in value. But on November 1st of this year, Chegg’s stock price took a dramatic plunge — it went from $62 to $32 in a single day!
So, what happened on Nov. 1st? That was the day Chegg released its quarterly financial report. (See here for a summary.). Among other things, Chegg announced that its paid subscribers fell to 4.4 million, an unexpected decline from 4.86 million in the previous quarter and a small fraction of the almost 20 million college and university students overall. (See here, for example.) Is this the beginning of the end for Chegg? Let’s hope so …