On Tuesday, Apr. 30, Chegg stock decreased after the online education firm published its first quarter release.

Aside from Chegg Inc., other edTech firms also experienced the same thing. The question now is, are free AI tools to blame? 

Chegg Stock Plummets

According to Yahoo News' latest report, Chegg stock decreased by more than 20% on Tuesday. The online education company's stock already lost almost 70% in 2023.

Chegg Inc.'s stock was cut in half in 2024, meaning that from its peak in 2021, it is down by more than 95%. In addition to Chegg Inc., MarketWatch reported that Coursera's stock also dropped significantly.

Coursera's stock specifically lost more than 14%. Because of this, the online course company is down by $21.3 million or 14 cents per share in the first quarter.

However, Coursera's performance in 2024 is still better than that of 2023, when it lost over $32 million or 22 cents a share.

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Are Free AI Tools to Blame?

Chegg and Coursera offer online education and courses to students. However, they face more intense market competition because of the rising free artificial intelligence tools.

"We question if Chegg can build an AI experience that is meaningfully better than free alternatives that students will be willing to pay for," said Jefferies analyst Brent Thill.

"Chegg has historically always beaten free competitors in the marketplace, but we believe the AI wave presents a truly credible free product experience to Chegg's paid subscription," he added.

READ MORE: Coursera nabs USD20 million more in Series B funding