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    Does Fraud Suits Over Alleged “Ghost Students” Change The Bull Case For Stride (LRN)?

    Simply Wall St·12/10/2025 09:24:10
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    • In recent months, multiple law firms have launched or publicized securities fraud class action lawsuits against Stride, Inc., alleging inflated enrollment figures, compliance lapses, and suppression of whistleblowers during the period from October 22, 2024 to October 28, 2025.
    • The core allegation that Stride used “ghost students” to overstate enrollment strikes at the reliability of a key operating metric underpinning its business model and prior growth story.
    • With these fraud allegations calling Stride’s reported enrollment quality into question, we’ll now examine how this may reshape its investment narrative.

    Find companies with promising cash flow potential yet trading below their fair value.

    Stride Investment Narrative Recap

    To own Stride today, you have to believe in the long term viability of online and hybrid K-12 learning as a scalable, cash generative model. The immediate catalyst is whether management can stabilize enrollments after a sharp guidance reset, while the biggest near term risk is that the securities fraud class actions undermine confidence in reported student counts and trigger tighter oversight of funding relationships.

    The most relevant recent development is the wave of securities class action filings, including MacMahon v. Stride, Inc., which directly targets alleged enrollment inflation, compliance failures, and misleading disclosures. These cases sit alongside a more than 54% share price drop after muted guidance, tying the legal overhang tightly to the same enrollment and funding metrics many investors previously treated as reliable catalysts.

    Yet behind the headline lawsuits, one underappreciated risk investors should be aware of is Stride’s exposure to contract loss and reputational fallout if...

    Read the full narrative on Stride (it's free!)

    Stride's narrative projects $3.1 billion revenue and $523.9 million earnings by 2028. This requires 9.3% yearly revenue growth and a $236 million earnings increase from $287.9 million today.

    Uncover how Stride's forecasts yield a $115.50 fair value, a 86% upside to its current price.

    Exploring Other Perspectives

    LRN 1-Year Stock Price Chart
    LRN 1-Year Stock Price Chart

    Six members of the Simply Wall St Community currently value Stride between US$113.75 and US$215.60 per share, highlighting wide disagreement on upside. Set those views against the new fraud and compliance allegations, which could directly affect the very enrollment driven revenue story many of those models rely on, and it becomes even more important to compare multiple perspectives before forming a view.

    Explore 6 other fair value estimates on Stride - why the stock might be worth over 3x more than the current price!

    Build Your Own Stride Narrative

    Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

    • 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.
    • Our free Stride research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Stride's overall financial health at a glance.

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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.