Stride (LRN) Valuation After Class Action Allegations Over Enrollment Metrics and ‘Ghost Students’
Stride (LRN) is back in the spotlight after a wave of securities class action filings accused the online education company of inflating enrollment with so called ghost students and downplaying operational problems.
See our latest analysis for Stride.
Those allegations have clearly reset expectations, with a roughly 61.9% 3 month share price decline and a 1 year total shareholder return of about negative 43.3% eclipsing what had been a strong multiyear run, even after today’s bounce to around 62.68 dollars.
If this kind of volatility has you comparing options in the sector, it might be worth scouting other education and training names via our fast growing stocks with high insider ownership for fresh ideas.
Now trading at a steep discount to both its historical gains and analyst targets, Stride’s slide has opened a clear valuation gap. The key question is whether this reflects a mispriced quality compounder or a market verdict on fading growth prospects.
Most Popular Narrative Narrative: 45.7% Undervalued
With Stride last closing at 62.68 dollars against a narrative fair value of 115.50 dollars, the gap rests squarely on long term earnings power rather than sentiment.
Ongoing investments in proprietary technology platforms including AI and data driven engagement tools are expected to yield both educational outcomes and operational efficiencies, supporting further improvement in net margins.
To see what kind of revenue runway and margin lift could justify that valuation gap, and how earnings might scale into the next cycle, dig into the full narrative and unpack the assumptions driving that fair value call.
Result: Fair Value of $115.50 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, recent platform rollout issues and tighter enrollment caps could significantly restrain growth and challenge assumptions behind both revenue forecasts and margin expansion.
Find out about the key risks to this Stride narrative.
Build Your Own Stride Narrative
If you are not convinced by this view, or prefer to test your own assumptions against the numbers, you can build a personalized narrative in minutes: Do it your way.
A great starting point for your Stride research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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