EdTech Company Chegg Slashes 45% Workforce, Brings Back Former CEO To Tackle ‘New Realities Of AI’

• Chegg reinstates former CEO Dan Rosensweig to lead the company, effective immediately.
• The learning company will lay off 388 employees and double down on corporate courses.
• Chegg says it will remain a standalone private company after months of being on the market for an acquisition.

Failing to secure a buyer, Chegg, Inc., on Monday announced a sweeping restructuring that includes laying off nearly half of its remaining workforce, reinstating former CEO Dan Rosensweig, and shifting its focus toward professional courses.

“The new realities of AI and reduced traffic from Google to content publishers have led to a significant decline in Chegg’s traffic and revenue,” the company said in an exchange filing. 

“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 will focus on business-to-business skilling courses, building on its existing businesses in language learning, workplace learning, and AI-related courses.

Chegg also said that after its strategic review with its advisor, Goldman Sachs, including proposals to be acquired and go private, it has decided to remain a standalone public company.

Management And Organizational Changes

The company plans to remove 388 employees, or about 45% of its current workforce, “to better align our cost structure with our newly announced strategic focus relating to our operations on a stand-alone basis.” It will take charges of up to $19 million next year, the company said.

As part of Monday’s announcement, Dan Rosensweig will return as CEO effective immediately, replacing Nathan Schultz, who will step down from the role and remain as an executive advisor to Rosensweig and Chegg’s board. 

Rosensweig, a former top Yahoo executive who joined Chegg as CEO in 2010, stepped down from the post in April 2024, handing the job to Schultz, who was operating chief at the time.

In May, Chegg said it would lay off 22% of its workforce, mostly impacting its Chegg Study and corporate services divisions in the U.S. and Canada.

What Retail Investors Say About Overhaul?

Shares of the company gained 4.2% in after-hours trading on Monday. On Stocktwits, the retail sentiment for CHGG shifted to ‘bullish’ as of early Tuesday, from ‘neutral’ the previous day.

“$CHGG Well no acquisition. Bummer. But they have a few growing segments and once they scrap the homework help service or get it highly profitable due to AI, this can still go to $3 a share this year,” said one user.

There were several bearish comments as well, with users saying that its courses are not competitive at their price points and the stock could ultimately delist.

As of the last close, CHGG stock is down 10.6% year-to-date.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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