Innodata Inc. (NASDAQ: INOD), a small-cap AI and data company, is making headlines again, but not for its tech. The company is currently facing a class action lawsuit from investors, which claims it may have made misleading statements. This legal distraction comes at a time when Wall Street is already questioning recent moves.
Bridgeway Capital Management trimmed its position in Innodata by over 77 percent in the last quarter. They went from holding more than 36,000 shares to just over 8,000. That leaves them with a stake worth about 330,000 dollars.
At first glance, that kind of drop might look like a red flag. But other investors are still showing interest.
New players like Allworth Financial, USA Financial Formulas, and SBI Securities bought in during the same quarter. One investor, AlphaQuest, increased its position by nearly 80 percent. As of now, about 31 percent of Innodata’s stock is owned by institutions and hedge funds.
Profits Up, Stocks Down
Despite some investors stepping back, the company just posted solid results. Innodata reported earnings of 22 cents per share for the recent quarter. That beat analyst expectations by 5 cents. Revenue came in at 58.3 million dollars, which is up 120 percent compared to the same time last year.
The company’s return on equity hit over 66 percent. That’s a strong sign the business is managing money well and generating value for shareholders. It also has a healthy balance sheet, with low debt and a quick ratio of 1.84, meaning it can easily cover its short-term obligations.
Insider Selling Raises Eyebrows
While the financials are strong, some insiders at Innodata have been selling large amounts of shares. The company’s CFO sold 30,000 shares earlier this year. The COO sold nearly 49,000 shares. In total, insiders sold over 275,000 shares last quarter, worth more than 17 million dollars.
That doesn’t always mean trouble, but it’s something investors are watching closely. When top executives sell off a large portion of their holdings, it sometimes suggests they think the stock may be near a peak.
Analysts remain optimistic. Several have maintained buy ratings, with price targets ranging from $55 to as high as $74. Only one analyst has given it a hold rating.
Innodata’s stock recently traded at around 35 dollars, well below its 52-week high of 71 dollars. However, with strong revenue growth, analyst support, and the rising demand for AI services, this stock still has room to move.
