Chegg Continues to Crack, Now Down 93%
Plus, cheating on medical licensing exams. Plus, India has a new anti-cheating law.
Issue 273
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Chegg Continues to Shrink
On Monday, Chegg released its earnings report for the last quarter of 2023, and for all of 2023. It was not good.
Here are some of the numbers for Q4:
Revenue: $188 million, down 8%
Subscriptions services: $166 million, down 6%
Subscribers: 4.6 million, down 9%
The numbers for the year were no different in terms of direction:
Revenue: $716 million, down 7%
Subscriptions services: $640 million, down 5%
Subscribers: 7.7 million, down 6%
As of Thursday morning, Chegg stock was down to $8.49 a share — an epic and humiliating tumble from its high of $113.50 in February 2021. That’s a loss of 93%.
We told you.
A few things to point out, if they did not already spring to your attention. One is that the rate of decline in Q4 was greater than it was for the year overall, which means Chegg’s collapse is accelerating. Two is that Chegg is still making $188 million every 90 days by selling cheating — $166 million of its $188 million came from its “subscription services,” where students pay Chegg for answers to test questions and homework assignments. The point is that Chegg still has major money and literally millions of students are paying it so they don’t have to do their own work.
Chegg’s leaders — which surprisingly still have jobs — blame the decline on generative AI, which will help students cheat for free. Which should, in turn, tell you all you need to know about what Chegg’s business is.
Another note is that, according to this article in Yahoo Finance, Chegg may be deeply vulnerable to what it calls institutional shareholders. The article says:
The top 12 shareholders own 50% of the company
It says further that:
And institutional investors saw their holdings value drop by 11% last week. Needless to say, the recent loss which further adds to the one-year loss to shareholders of 50% might not go down well especially with this category of shareholders. Also referred to as "smart money", institutions have a lot of sway over how a stock's price moves. As a result, if the downtrend continues, institutions may face pressures to sell Chegg, which might have negative implications on individual investors.
In other words, if these 12 big investors drop Chegg — or suddenly find ethics and decide they don’t want to profit from cheating anymore — the company could be in more serious trouble.
Frankly, I’ve not understood why academic leaders, or schools, or academic integrity organizations have not pressured these investors to drop Chegg. It seemed like an easy place to apply some pressure. Maybe someone will now. Considering the losses these investors are weathering, it may be a good time for it.
Yahoo Finance does not list these top shareholders, only mentioning the biggest of the dirty dozen:
The company's largest shareholder is The Vanguard Group, Inc., with ownership of 9.3%.
According to the Google box, Vanguard is headquartered in Pennsylvania.
Though it’s sure to be less accurate now, in Issue 142, we did look at Chegg’s biggest investors.
Look for Chegg to make some hail-Mary play like buying a coding bootcamp or an online program manager (OPM) company, to try to get out of the market of selling what AI is giving away.
Anyway, the Chegg freefall continues. Notably driven by lack of profit, not moral compass. But a freefall is a freefall and I will take it. If you care about academic integrity or the value of educational credentials, you should too.
Cheating on the Medical Licensing Exams
A lengthy article in Medscape outlines ongoing cheating on the exams that demonstrate competency and mastery for medical licensing. Yes, doctors.
The news is that:
The United States Medical Licensing Examination (USMLE) program is invalidating scores attained by some examinees after an investigation revealed a pattern of anomalous exam performance associated with test-takers from Nepal.
Too many students in one cluster scored too well or too similarly to be chance, in other words.
But it’s not really a random thing, according to the article. Medical exams have been plagued with cheating, in this case the open selling of past test questions and answers, for years.
It’s a real and serious problem. And though the article does not say it, exam theft and profit-fueled cheating are a problem for nearly all professional credentialing or certification authorities.
What the article does say is that:
The selling and buying of USMLE questions online have become rampant in recent years, particularly by groups within the international medical graduate (IMG) community
Rampant.
Doctors.
Sources in the article say the questions and answers are openly sold on Facebook and other platforms. Again, very common.
The article is also good in that it does not shy away from the real consequences of cheating, including:
[a doctor] who now is studying public health at Johns Hopkins University in Baltimore, Maryland, said that the issue is important for "all stakeholders" who care about patient safety: "Would you want a doctor who has cheated on the medical licensing exam to take care of you?"
And that others:
expressed frustration about being bombarded with recall advertisements and unwanted messages about buying USMLE questions while trying to find study materials. One poster called the practices a "huge slap to all those IMGs who are struggling day and night, just to get a good score."
Another doctor said:
"I am baffled at how many [groups] post on social media and brazenly advertise their 'services,'" she told Medscape Medical News. "No one arrests them, their customers go on to score abnormally high on the boards, making it unachievable for people who take the honest route”
Yes — cheating directly degrades public service and safety, and the value of the credential, and trust in the profession. It also punishes honesty.
Here’s more from the article, where “recall packages” are the stolen questions and answers:
Groups offering recalls are easily findable on sites such as Telegram and Signal. Telegram is a cloud-based messaging app that focuses on security, and Signal is an encrypted messaging service.
The website recallmastery.com purports to offer a range of USMLE recall packages, from a free, unsorted version to Step 1 and Step 2 packages that include "fresh updates," and sections with "mostly repeated topics. Prices range from the free version to the $799 VIP package.
Another site called MedPox.com boasts 2024 Step 2 recalls, advertising " actual exam questions to get HIGH scores." The website's owner states that the recalls were collected "by my friends," and to message the them to be added to the "recalls group."
A reporter was able to easily download a free version of alleged USMLE questions and answers from recallmastery.com. The document was a combination of typed and handwritten notes about medical questions, with red circles around recalled answers.
Yup. For most every exam for any professional certification, you can buy the answers.
What is clear, and addressed in the article, is that the USMLE and its partners are not doing enough to curb cheating, recent action in Nepal aside. If people are selling old test questions, you have to write new ones. Yes, that’s expensive. Yes, that’s legally complicated. But the alternative is to feed the cheating.
You also have to invest in detection techniques that can easily pinpoint compromised questions and the examinees who likely accessed them. Invalidating those scores or invalidating the compromised material from the entire exam could help. To me, there’s just no excuse for not doing that.
As I say all the time, you can invest in stopping cheating or you can have unchecked cheating. And for the third time — doctors. We’re talking about doctors.
India Passes Stiff New Anti-Cheating Laws
The BBC and many other outlets have reported on a new anti-cheating law in India. The law essentially nationalizes exam cheating and is targeted at cheating on civil service and career placement exams, which are known to be frequently compromised.
The law, the BBC reports:
carries a jail sentence of three to 10 years for those who facilitate cheating.
It also carries a fine ranging between 1 million rupees ($12,040; £9,551) and 10 million rupees.
Ten years and $120,000 — yikes.
Also from BBC:
government has said the act will bring "greater transparency, fairness and credibility" as it is the first federal legislation to prevent malpractices in examinations.
To me, the big word there is credibility. No country can long pretend their students and graduates and schools are credible if they allow cheating like India does. Or like the United States does.
The BBC reports without any flair that:
Cheating is prevalent in India
And cites:
An investigation by The Indian Express newspaper had found 41 documented cases of question paper leaks in job recruitment exams across 15 states over the last five years.
Still, skeptics of the new law say it won’t accomplish much because several state laws already criminalize exam cheating and because the country has not yet invested in securing its exam deliveries — the test centers themselves. Both arguments seem fair. Punishments alone won’t prevent behavior. To be actual deterrents, people have to be caught first. And, to extend the metaphor, if you have no police, the possible punishments are frivolous.
Further, from the BBC:
However, "high quantum of punishment cannot be a one stop solution for the cheating menace," says Jacob Punnoose who worked as a top ranking officer in the Indian police service before his retirement.
Cheating can be prevented by tightening security at examination centres, Mr Punnoose says. "It's possible to use mass surveillance digital technology to prevent cheating by just monitoring students who take the examination."
True. And, seriously. If you’re not watching the examinees take the exam, you’re not doing much. All the punishment in the world won’t matter.
Still, good for India. Having laws and punishments on the books is better than not having them.
Exam cheating, for the record, is still entirely legal in the United States. No national laws address it. An estimated 17 states have laws banning academic cheating, though they are never enforced. But not the country — nothing. Here, India is ahead of us. As are Ireland, England, Australia, New Zealand, and others. It is, in my view, a growing national shame, directly undermining our credibility.