NRDY

Nerdy ($NRDY) CEO's $28M Buying Spree Over 18 Months vs. Persistent Losses: What Should Investors Believe?

11/26/2025 03:13

Nerdy ($NRDY) operates an online tutoring platform as a small-cap edutech company with a market capitalization of approximately $215 million. This company presents an extremely intriguing dilemma for investors: while the CEO has poured over $28 million of personal funds into buying company shares, the business continues to post quarterly revenue declines and losses. The most striking aspect is CEO Charles Cohn's purchasing pattern. His buying spree that began in June 2024 goes far beyond typical management confidence displays. In June alone, he purchased 2.12 million shares for $3.74 million. When the stock plummeted from $1.59 to $0.83 in August, he became even more aggressive. Over just two days—August 16 and 19—he bought a staggering 13.16 million shares for $12.07 million, representing a significant portion of the company's market cap purchased by one individual. Cohn's buying didn't stop there. From November to December 2024, he embarked on another massive purchasing campaign, acquiring 14.03 million additional shares for $17.59 million. Most recently, in November 2025, he bought another 730,000 shares for $720,000. Over 18 months, his total investment has exceeded $28 million, representing over 13% of the current market capitalization. The problem is that despite the CEO's conviction, the company's actual performance remains lackluster. Q2 2025 revenue declined 11% year-over-year to $45.26 million, with a loss of 7 cents per share. While this beat the expected 10-cent loss, the company continues to operate in the red. Q3 also showed a 1% revenue decline to $37 million year-over-year, with an EBITDA loss of $10.2 million. More intriguingly, other executives are behaving differently. CFO Jason Pello and CLO Christopher Swenson regularly sell shares, primarily for tax purposes related to restricted stock vesting, creating a stark contrast to the CEO's massive purchases. Only Director Abigail Blunt has joined in with small, intermittent purchases. Nerdy is pursuing operational improvements through the launch of its AI-native Live Learning Platform 2.0, cost controls, and price increases to enhance margins. The company also secured a $50 million term loan to strengthen liquidity and forecasts Q4 2025 revenue between $45-47 million. Current Wall Street consensus rates the stock as 'hold' with a $2 price target, representing about 57% upside from current levels. However, this appears significantly different from what the CEO perceives as intrinsic value. Investors must consider two opposing scenarios. The first is that the CEO is right. If someone with the most intimate knowledge of the company is investing with such conviction, there may be positive changes or business opportunities the market hasn't recognized yet. The potential of AI education platforms or cost structure improvements could be greater than expected. Conversely, the scenario where the CEO is misjudging cannot be ignored. Online education market competition is intensifying, and post-pandemic growth deceleration continues. With US consumer sentiment falling 29% year-over-year to 51.0 in November 2025, household spending capacity for educational services may also be limited. The most critical observation point is whether quarterly performance improvements materialize. For the CEO's purchases to be meaningful, revenue growth turnaround and loss reduction must become visible. Changes in other executives' selling patterns are also noteworthy—if the CFO or CLO cease non-tax-related sales, it could signal positively. Risk factors include potential personal liquidity issues from the CEO's concentrated investment and the possibility of reaching additional purchase capacity limits if business improvements don't materialize as expected. Opportunity factors include the current stock price trading below the CEO's average purchase price, suggesting a relative bottom, and the potential for significant upside in small-cap stocks when positive changes occur.