NRDY

Nerdy ($NRDY) CEO Bets $30M on Stock While Losses Continue...Who's Right?

12/16/2025 13:56

Nerdy ($NRDY) CEO Charles Cohn has been sending powerful signals to the market through approximately $2.6 million worth of share purchases from November to December 2025, extending his massive investment campaign that saw him acquire roughly $30 million worth of company stock throughout 2024. Nerdy operates as an online education platform company, best known for its 'Varsity Tutors' brand, providing one-on-one tutoring and small group learning services. The company serves a broad customer base from K-12 students to college students and adult learners, utilizing AI-powered learning matching systems and real-time online education platforms. Key competitors include Wyzant, Tutor.com, and Chegg, operating in the edtech sector that gained significant attention during the pandemic-driven surge in online education demand. However, contrasting sharply with CEO Cohn's confident investment behavior, Nerdy's financial performance continues to face challenges. Q2 2025 revenue decreased 11% year-over-year to $45.26 million, with an adjusted loss per share of 7 cents. While this beat analyst expectations of a 10-cent loss, the declining revenue trend remains concerning. Q3 also showed a 1% year-over-year revenue decline, continuing the sluggish performance. A detailed examination of the CEO's purchasing patterns reveals intriguing insights. When the stock plunged from the $1.50s to the $0.80s in August 2024, he executed massive purchases worth approximately $12 million. From November to December 2024, he bought shares almost daily, investing hundreds of thousands of dollars each time for a total of over $15 million. This pattern repeated in 2025, with an additional $2.6 million invested from mid-November to December. In contrast, CFO Jason Pello and CLO Christopher Swenson have been regularly selling shares. While most of their sales appear to be under 10b5-1 plans or related to stock option exercises, they present a stark contrast to the CEO's aggressive buying. Notably, in December 2025, Pello sold 75,000 shares, realizing approximately $100,000. Investors should focus on the CEO's purchase price levels as a key indicator. His average purchase prices were $1.59-1.93 in June 2024, $0.89-1.03 during the August crash, and $1.26-1.70 at year-end 2024. Recent 2025 purchases occurred in the $0.84-1.44 range, not significantly different from the current share price around $1.27. Structural challenges facing Nerdy cannot be overlooked. The online education market has normalized post-pandemic with slower growth rates, and economic recession concerns are increasing parental burden regarding education spending. Additionally, the advancement of AI tools like ChatGPT raises concerns about potential contraction in the personal tutoring market itself. However, the company is attempting differentiation by launching its AI-native Live Learning Platform 2.0 to address these challenges. This platform analyzes learner preferences and patterns to optimize tutor matching while tracking learning progress in real-time. The company is also working on margin improvement through price increases and cost controls. To assess whether the CEO's exceptional buying behavior is justified, several scenarios must be considered. In an optimistic scenario, AI integration and operational efficiency improvements could begin showing results, with education demand rebounding alongside economic recovery. Analysts' $2.00 price target implies 57% upside potential from current levels. Conversely, in a risk scenario, revenue declines could persist, and traditional personal tutoring models might be disrupted by advancing AI technology. If the stock continues underperforming despite the CEO's consistent buying, questions about his judgment could intensify. Critical signals to monitor include: reversal of the revenue decline trend, actual performance metrics of the AI platform, and changes in the CEO's buying patterns. If Q4 2025 results show year-over-year revenue growth and significantly improved adjusted EBITDA losses, the CEO's confidence could be vindicated. From an investor perspective, while the CEO's strong conviction and continuous capital investment represent clear positive signals, they require backing from actual business performance. At current price levels, considerable risk appears already reflected, though additional downside cannot be ruled out if the turnaround is delayed.