Why Chegg and Pearson Just Popped, but Duolingo Dropped

On Tuesday, an earnings beat from educational software company Chegg (Nasdaq: CHGG) the previous evening somehow managed to spark a sell-off across the educational stocks sector, sending language learning company Duolingo (Nasdaq: DUOL) down 10%, costing Chegg rival Pearson (NYSE: PSO) nearly 15% of its market capitalization, and crashing Chegg itself for a 48.5% loss. Chegg warned investors of the impact ChatGPT was having on its business. After Bank of America called the damage to Pearson stock in particular "overly harsh," that stock had gained 11% by 2 p.m. Wednesday, while Chegg was chugging 13% higher.