Nathan Schultz, another CEO at Chegg, acknowledged that ongoing macroeconomic trends are likely to worsen before they improve, necessitating these layoffs.

Chegg's future remains uncertain as it aims to enhance operational efficiencies and invest in AI capabilities to stay competitive.

Analysts currently hold a Moderate Sell consensus on Chegg stock, with a price target of $1.30, suggesting a potential upside of 77.45%.

On May 12, 2025, Chegg announced it will lay off approximately 22% of its workforce, equating to 248 employees, as part of a cost-reduction strategy amid declining web traffic and heightened competition from AI tools.

The company's revenue has plummeted by 30% to $121 million, with subscription service revenue dropping nearly a third to $108 million, resulting in a net loss of $17.5 million.

CEO Dan Rosensweig emphasized that these decisive actions are necessary to align the company's cost structure with current market realities.

The layoffs will predominantly impact roles in the US and Canada, particularly within Chegg Study and corporate services, which will account for 66% of the redundancies.

As Chegg explores strategic alternatives, including a potential sale or going private, analysts express concerns regarding its ability to compete against free AI solutions.

In an effort to adapt, Chegg has launched an AI-powered study assistant called CheggMate, although this initiative has yet to reverse its declining fortunes.

Earlier this year, Chegg filed a lawsuit against Google, alleging that the tech giant's AI-generated summaries have harmed demand for its original content and negatively impacted its revenue.

In a bid to diversify its revenue streams, Chegg earned $4 million in the first quarter from licensing content to AI companies, with expectations for more in the second quarter.

Despite the layoffs and disappointing quarterly results, Chegg's stock price rose by 4.8% on the day of the announcement, reflecting some investor confidence amid the restructuring.