Shares in Pearson PLC (LSE:PSON) jumped over 9% to 823.79p on Wednesday morning, recovering some of the ground lost the day before due to worries raised by online learning company Chegg about losing sales to artificial intelligence such as ChatGPT.
The company and analysts pointed out that the FTSE 100 education, assessment and qualifications group and New York-listed Chegg had very different types of products and businesses.
“Chegg is a fundamentally different company with a different business model,” a spokesperson for Pearson told reporters.
They said Pearson is a "highly diversified company" and pointed out that four-fifths of profits are derived from businesses outside higher education, and that the Pearson+ subscription service had seen a threefold rise in user numbers over the past year.
Deutsche Bank analyst Benjamin Yokyong said in a note on Wednesday that his team believe Pearson "has been oversold on the back of Chegg's AI comments" and reiterated a 'buy' recommendation, after a 15% fall to 754p yesterday.
"We think the read-across to Pearson [from Chegg] is limited and view the sell-off as an attractive entry point," Yokyong wrote.
Analysts at JP Morgan also defended the London-listed group's position in comparison with Chegg.
"While ChatGPT could be seen as an alternative for students seeking answers to their homework we do not see it as an alternative to Pearson’s text books, courseware, and learning platforms that provide trusted programmes that are adopted by colleges, and have to be followed and consumed by students for about 70% of higher education courses," the JPM analysts said.
The difference between Pearson and Chegg, they added, "is that Pearson provides the content and sets the questions whereas Chegg and ChatGPT provide answers to those questions".