Management's confidence in their own stock can be gauged by insider buying activity, where executives purchase company shares with their own money.These insiders, with their broad and deep company knowledge, are generally considered to be sending a positive signal when they buy stock. Insiders can include company officers, directors, and major shareholders (owning 10% or more), and their purchases are publicly disclosed via SEC filings.

Notably, the CEO of one under-the-radar, small-cap company has been heavily bulking up on his own company's stock this month. So, which Russell 2000 Index (RUT) component is it - and why is the CEO so gung-ho about its prospects now? Let's try and find out.

About Nerdy Stock

Founded in 2007, Nerdy (NRDY) is a platform for live online learning. The company's purpose-built proprietary platform leverages technology, including artificial intelligence (AI), to connect learners of all ages to experts. Nerdy’s comprehensive learning destination provides learning experiences across thousands of subjects and multiple formats. Its market cap is currently $554.15 million.

Nerdy stock is down 8.7% on a YTD basis - underperforming the broader Russell 2000, which has gained 4.3%.

However, the CEO seems to like the shares around current prices, based on a series of major purchases in mid-March.

CEO Makes Significant NRDY Stock Purchase

CEO Charles Cohn has been quite active in buying his own company's shares this month, with 5 purchases conducted from March 11 through March 15. The latest buy, on March 15, increased the CEO's stake in the company to 19.2754%, from just under 19% at the start of the month.

All together, Cohn purchased 367,991 shares of NRDY worth $1.05 million in March. The purchase prices ranged between $2.79 and $2.99 per share.

And this month's activity was no one-off buying spree for Cohn. The CEO has been a regular repeat buyer of his own company's stock, with consistent purchases made since 2022. However, the March 11 pickup was his first insider buy since last September.

Q4 Results Exceed Expectations

After the close on Feb. 27, Nerdy reported upbeat results for the latest quarter, with the company delivering a beat on both revenue and earnings.

In the fourth quarter, Nerdy reported revenues of $55.1 million, marking a yearly increase of 32%. Analysts were anticipating just $54.76 million in revenue. Consumer revenues - which accounted for 79% of total revenues - rose by 17.1% from the previous year. Active members more than doubled to 40,700 from 20,200 at the end of the previous year.

The company reported a per-share loss of $0.05 for the quarter - not only an improvement from the prior year's loss of $0.08 per share, but also far better than the Street estimate for a loss per share of $0.11.

Nerdy's liquidity position also remained solid, as the company exited the quarter with a cash and equivalents balance of $74.8 million, with no significant debt load on its books.

Is NRDY an Overlooked AI Growth Stock?

At the Goldman Sachs Communacopia & Technology Conference Fireside Chat last November, the company's management stated that it has the potential to eventually generate $1 billion in revenue over the long term - a projection it bases on a fairly modest 0.5% market penetration rate. Nerdy indicated that there's substantial room for it to snag a bigger share of the pie, though, with the market comprised of "1 million to 2 million independent tutors" and "5,000 mom-and-pop tutoring companies," while Nerdy says it's the "only company that's doing live online (education) at scale (3,000+ subjects)."

Further, the company is also betting on its AI capabilities to grow its business. Its new My Learning Hub and Subject Portals uses AI for content creation, which has allowed for quick expansion of its resources. Furthermore, its AI tutor chat is available in hundreds of subjects, improving its operational costs and scaling capabilities.

Looking ahead, analysts are forecasting forward revenue growth of 21.65% for NRDY, well beyond the sector median of 3.96%.

What Do Analysts Expect for NRDY Stock?

Analysts are optimistic about Nerdy stock, which has a consensus “Moderate Buy” rating. Out of 9 analysts covering the stock, 5 have a “Strong Buy” rating, 2 have a “Moderate Buy” rating, and 2 have a “Hold” rating.

The mean target price for NRDY is $4.78, which denotes expected upside potential of about 52.7% from current levels.