Why Nerdy Stock Tumbled Today

Shares of online learning platform company Nerdy (NYSE: NRDY) fell hard today after the company reported its fourth-quarter results yesterday. While sales and earnings beat Wall Street's consensus estimates, investors weren't happy with Nerdy's revenue decline and shrinking gross margin.

As a result, Nerdy's stock was down by 10.7% as of 11:11 a.m. ET.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Top- and bottom-line beats, but slowing growth

Nerdy reported a loss per share of $0.09 in the quarter, which was significantly better than analysts' consensus estimate of a loss of $0.14 per share. Nerdy's sales of $48 million beat the top end of the company's guidance for the quarter as well, which was in the range between $44 million to $47 million, and ahead of Wall Street's estimate of about $45 million.

But it wasn't all rosy for Nerdy in the quarter. Sales were down 13% from the year-ago quarter, and its gross margin fell to 66.6%, down from 71.3% in the fourth quarter of 2023. Nerdy's management said that a decline in average revenue per member (ARPM) in the consumer segment was to blame for the gross margin retreat. The company also said that its net loss widened to $15.7 million, worse than its loss of $9.2 million in the year-ago quarter.

Adding to the lackluster results was the fact that Nerdy finished the year with 37,500 active members, a decline of about 8% from 40,700 in the previous year.

The upcoming quarter may not be much better

Nerdy's management issued guidance for the first quarter, with sales expected to be between $45 million to $47 million. That represents a significant decline of 14% from the year-ago quarter, at the midpoint of guidance.

Additionally, Nerdy's leadership said its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) would be a loss of $7 million at the midpoint, down drastically from positive EBITDA of $24,000 in the first quarter of 2024.

With Nerdy's sales falling, EBITDA dropping, and the company's active users shrinking, it's no surprise to see its share pricing plunging today.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $311,551!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $44,990!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $519,375!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

Continue »

*Stock Advisor returns as of February 28, 2025

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.