I recently wrote about two monsters eating software: rising interest rates punish long-duration cash flows, and AI attacks seat-based pricing and fixed-cost economics. The post was a bit theoretical. This post delivers the goods: information about some software companies that have explicitly attributed their troubles to AI. What I found suggests that my thesis is playing out even faster than expected.
The Canonical Casualties
Chegg is the clearest case of AI-driven destruction in the public markets. The online education company explicitly blamed ChatGPT for hurting its business during its May 2023 earnings call, triggering a 48% single-day stock decline. CEO Dan Rosensweig told investors: “Since March we saw a significant spike in student interest in ChatGPT. We now believe it’s having an impact on our new customer growth rate.”
The numbers since then have been brutal. The stock is down 99% from its 2021 peak of $113 to under $2. Its market cap collapsed from $14 billion to roughly $191 million by late 2024.
