Key Points:
- Major Workforce Reduction: Chegg Layoffs will affect between 22% and 25% of employees—up to 441 jobs—as the company restructures to cut costs.
- AI Disruption in EdTech: The move reflects growing pressure from AI-powered platforms that are replacing traditional homework help and tutoring services.
- Strategic Shift: Chegg plans to streamline operations, close offices in the U.S. and Canada, and reposition itself for long-term savings and digital transformation
Chegg Layoffs were announced on Monday, with the company set to cut 45% of its workforce, citing the “new realities” of artificial intelligence and reduced online traffic as key challenges.
The move affects around 388 employees and marks Chegg’s second major round of layoffs this year. The company said the restructuring aims to align its operations with the growing influence of AI tools in education and the shifting patterns of digital traffic that have disrupted its core business model.
AI Disruption Forces Strategic Shift
Founded two decades ago, Chegg rose to prominence as a leader in online education services, offering textbook rentals, tutoring, and homework help. However, the Chegg Layoffs reflect the rapid rise of generative AI platforms like ChatGPT, has significantly altered how students access and use study resources.
Chegg noted that declining traffic from search engines, particularly Google, has also contributed to revenue losses. The company previously filed a lawsuit against Google, arguing that AI-generated summaries of search results had diverted users away from its content. In its statement Monday, Chegg reaffirmed that “AI and reduced traffic from Google to content publishers have damaged its business.”
To adapt, Chegg plans to restructure its academic learning products and expand its internal AI-driven tools, including automated flashcard generators and personalized study assistants. These efforts, the company said, are part of its long-term plan to “rebuild around AI innovation while maintaining academic integrity.”
Leadership Changes and Strategic Outlook
Alongside the Chegg Layoffs, the company announced that Dan Rosensweig will return as Chief Executive Officer, effective immediately. Rosensweig, who first led Chegg from 2010 to 2024, replaces Nathan Schultz, who will transition into an advisory role for the company’s board.
Rosensweig previously served as a top executive at Yahoo before joining Chegg and guiding it through its 2013 IPO. His return signals a renewed focus on operational stability and innovation as the company adapts to a rapidly changing educational technology landscape.
Chegg also confirmed that it has ended its strategic review process, which had explored potential acquisition or merger opportunities. The board concluded that remaining an independent company “offers the best opportunity to maximize long-term shareholder value.”
Market Performance and Future Direction
Chegg’s market valuation has dropped dramatically over the past four years. The company’s stock, once trading at $113.51 in early 2021, has since declined by nearly 99%, leaving its current market capitalization at around $156 million. The decline reflects a broader industry trend where traditional educational service providers face intense competition from AI-driven learning alternatives.
In May, Chegg had already reduced its workforce by 22%, citing the accelerating adoption of AI among students. Despite these challenges, the company continues to invest in product innovation and AI integration to strengthen its market position.
Chegg Layoffs are part of a broader restructuring that will “focus on efficiency, product innovation, and sustainable growth,” emphasizing a long-term vision to reestablish itself as a leader in the evolving education technology sector.
