7 Most Popular AI Penny Stocks Under $5

1. Nerdy, Inc. (NYSE:NRDY)

Number of Hedge Fund Holders: 14

Nerdy (NYSE: NRDY) is a leading platform for live online learning and tutoring, with a mission to transform the way people learn through technology. The company uses AI to connect learners of all ages to experts and launched its flagship platform, Varsity Tutors. Students can access more than 3,000 subjects in different formats – one-on-one, group classes, and self-study.

For Q2 2024, Nerdy, Inc. (NYSE:NRDY) recorded $51 million in revenue, which was lower than analyst estimates but still showed a 4.39% year-over-year growth. Moreover, the loss per share was $0.08, ahead of Street expectations by $0.05.

Consumer Learning Membership’s subscription revenue increased 2% year-over-year and represented 72% of total company revenue. New consumer customer acquisition also rose 12% year-over-year. Active members of 35,500 as of June 30 were up 15% year-over-year.

The institutional business represented 21% of total revenue, with a 33% year-over-year increase. This segment of the company allows the introduction of products to school districts, and during Q2, it enabled access to the Varsity Tutors for Schools platform at nearly 600 school districts, for an additional 1.1 million students (bringing the total to 3.3 million students).

The company has merged all school institutional customers onto a single platform, providing a unified and personalized learning experience.

The lowest-priced product of Nerdy, Inc. (NYSE:NRDY) didn’t encourage consistent use, so it’s refocusing product selection towards premium memberships that emphasize a weekly tutoring habit with a consistent tutor.

According to Grand View Research, the global EdTech market size was estimated at $142.37 billion in 2023 and is expected to grow at a CAGR of 13.4% from 2024 to 2030. With the EdTech industry booming, Nerdy (NYSE:NRDY) is set for growth, and hence can deliver higher returns in the upcoming years. 14 hedge funds are bullish on the stock, as of June 30.

While we acknowledge the potential of Nerdy (NYSE:NRDY) to grow, our conviction lies in the belief that some AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NRDY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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