DEF: Nerdy Inc. Proposes Reverse Stock Split to Meet NYSE Listing Standards

Nerdy Inc. is seeking stockholder approval for a reverse stock split to regain compliance with NYSE minimum bid price requirements.

Summary

• Nerdy Inc. is holding a special meeting of stockholders on August 13, 2026, to vote on a proposal to amend its Certificate of Incorporation to effect a reverse stock split.
• The reverse stock split ratio can range from 1-for-5 to 1-for-15, with the final ratio to be determined by the Board of Directors.
• The primary purpose of the reverse stock split is to increase the per-share trading price of Nerdy Inc.'s Class A Common Stock to meet the NYSE's minimum bid price requirement of $1.00 per share.
• The company received a notification from the NYSE on March 5, 2026, indicating non-compliance with the minimum bid price rule, with a six-month compliance period ending September 5, 2026.
• If the reverse stock split is approved, the Board has the discretion to implement it at any time before December 31, 2026, or to abandon the proposal.
• The reverse stock split will affect all common stock equally, but fractional shares will be settled in cash.
• The company's Class A Common Stock closed at $0.92 on June 30, 2026.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this filing as having a negative sentiment due to the underlying issue of non-compliance with NYSE listing standards, which necessitates a reverse stock split, a measure often associated with financial distress.

Positives

• The proposed reverse stock split aims to help Nerdy Inc. regain compliance with NYSE listing standards, potentially avoiding delisting.
• A higher stock price may make the Class A Common Stock more attractive to a broader range of institutional and other investors.
• The Board of Directors believes the potential benefits of the reverse stock split outweigh the risks.

Negatives

• The company has not yet met the minimum bid price requirement for continued listing on the NYSE.
• There is no assurance that the reverse stock split will successfully increase the stock price or maintain compliance with NYSE rules.
• A reverse stock split may decrease the liquidity of the Class A Common Stock and result in higher transaction costs for odd lots.
• Some investors may view a reverse stock split negatively, potentially impacting the stock price.
• Fractional shares will be cashed out, which may not be ideal for all shareholders.

Risks

• Failure to regain compliance with the NYSE minimum bid price requirement by September 5, 2026, could lead to delisting from the NYSE.
• Delisting could negatively impact the liquidity and market price of the Class A Common Stock, and hinder the company's ability to raise capital.
• The reverse stock split may not achieve the desired increase in stock price or attract the intended investors.
• The market price of the Class A Common Stock could decline after the reverse stock split due to factors unrelated to the split itself.
• The reverse stock split could make a change of control more difficult due to the potential for issuing proportionally more shares.
• The company may not be able to satisfy other qualitative and quantitative listing standards of the NYSE even if the minimum bid price is met.

Future Outlook

The company is seeking stockholder approval for a reverse stock split to address its non-compliance with NYSE minimum bid price requirements. The Board of Directors will determine the specific ratio and whether to implement the split before December 31, 2026. The goal is to increase the stock price to meet listing standards and potentially attract more investors.

Management Comments

• The Board believes that it is in the best interest of the Company and its stockholders that the Board has the ability to effect, in its discretion, the Reverse Stock Split to improve the price level of our Class A Common Stock so that we are able to regain compliance with the minimum bid price requirement and minimize the risk of delisting from the NYSE.
• We understand that many brokerage firms and institutional investors have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers, which reduces the number of potential purchasers of our Class A Common Stock.
• Our Board believes that these potential effects are outweighed by the benefits of the Reverse Stock Split.

Industry Context

StockSavvy.ai notes that reverse stock splits are a common strategy for companies facing delisting due to low share prices. While often necessary to maintain exchange listings and investor appeal, they can be viewed negatively by the market and do not guarantee future stock price appreciation or sustained compliance.

Stakeholder Impact

• Shareholders: May experience a change in the number of shares held and potentially receive cash for fractional shares. Their percentage ownership will remain the same unless fractional shares are involved. The perceived value and liquidity of their holdings may be affected.
• Employees: Holders of stock options, RSUs, and other equity awards will see adjustments to the number of shares and exercise prices, though the aggregate value is intended to be preserved.
• Creditors: While not directly addressed, a delisting could negatively impact the company's ability to raise capital, potentially affecting its financial stability and ability to meet obligations.

Next Steps

• Stockholders to vote on the proposed amendments to the Certificate of Incorporation to effect a reverse stock split at the Special Meeting on August 13, 2026.
• The Board of Directors will determine whether to effect the reverse stock split and its ratio, if approved, at any time prior to December 31, 2026.
• If approved and implemented, the reverse stock split will become effective upon filing the Certificate of Amendment with the Secretary of State of the State of Delaware.

Key Dates

Recommendation

The filing indicates a critical need for the company to address its NYSE listing compliance, which is a significant concern. While the reverse stock split is a necessary step to avoid delisting, it does not inherently improve the company's fundamental business performance. Investors should hold their position to see if the company can leverage the compliance to improve its business and stock performance, rather than making a decisive buy or sell based solely on this procedural action.

Keywords

reverse stock split, Nerdy Inc., NYSE listing standards, stockholder meeting, Class A Common Stock, compliance, delisting, proxy statement, capital raise, stock price