NRDY

Nerdy($NRDY) CEO Invested $30M, So Why Is The Stock Still Struggling?

11/25/2025 13:52

The investment conviction shown by Nerdy ($NRDY) CEO Charles Cohn over the past 18 months represents a rare level of confidence even by Wall Street standards. From June 2024 to November 2025, the CEO has invested over $30 million of his own money into company shares. Particularly noteworthy is that when the stock plummeted from $1.59 to $0.83 in August 2024, he executed massive purchases totaling $12 million within just two days. Nerdy is an education technology company that provides online tutoring and learning services for K-12 students and college learners. Through its flagship Varsity Tutors service, it offers personalized one-on-one learning experiences, and recently launched AI-based Live Learning Platform 2.0 to maximize learning effectiveness. As a small-cap company with approximately $200 million market cap, it experienced growth during the COVID-19 online education boom but has faced challenges due to declining demand post-pandemic. The CEO's aggressive purchasing is significant for investors because when management invests substantial personal wealth into their own company stock, it signals absolute confidence in the company's future. However, there's a crucial point to note: despite the CEO's continuous buying, the stock price remains lackluster. Stock price data reveals this disconnect more clearly. Starting at $1.59 in June 2024, the price crashed to $0.83 in August, temporarily recovered to $1.58 in November, but has shown a declining trend since early 2025. The current price of $1.27 is similar to the CEO's average purchase price of $1.20-1.30 over the past 18 months, meaning the market has yet to align with the CEO's conviction. Recent earnings show gradual improvement in the company's situation. Q3 2025 revenue declined only 1% year-over-year, a significant improvement compared to previous quarters' 10%+ declines. Notably, adjusted EBITDA losses were better than guidance, and the launch of AI-native Platform 2.0 is improving operational efficiency. However, the company still records quarterly losses of around $10 million, indicating slow progress toward profitability. Examining insider trading patterns reveals interesting insights. While the CEO only buys, CFO Jason Pello and CLO Christopher Swenson regularly sell small amounts. Their sales are mostly for tax purposes following restricted stock vesting or under 10b5-1 plans, interpreted as routine portfolio management rather than negative signals about the company. Director Abigail Blunt shows consistent small purchases, indicating overall high management confidence in the company. The most important question for investors is 'when will the CEO's conviction be reflected in the stock price?' In a positive scenario, structural growth in the online education market combined with AI technology adoption for competitive advantage and cost efficiency improvements could drive the stock price toward the CEO's expectations. If AI Platform 2.0 results become visible and learning membership revenue continues growing, a 2-3x price increase from current levels is possible. However, risks to watch are clear. Intensifying competition in online education, reduced education spending due to economic recession, and delayed AI technology adoption effects could extend the current loss-making state. Liquidity risks inherent to small-cap stocks must also be considered. Current Wall Street analyst assessments are neutral, with an average 'hold' rating and $2.00 price target representing about 57% upside potential from current levels. However, considering the CEO's purchase scale and conviction level, actual intrinsic value may be higher. In conclusion, Nerdy presents a situation where positive factors like strong management conviction and gradual earnings improvement coexist with negative factors like persistent losses and market skepticism. Investors who believe the CEO's $30 million investment won't be in vain may find current price levels attractive, but should prepare for short-term volatility and small-cap risks.