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Assessing Stride (LRN) Valuation After Class Action Allegations on Enrollment and Compliance

Simply Wall St · 6d ago

Stride (LRN) is back in the headlines after a securities class action accused the online education company of inflating enrollment with so called ghost students and downplaying compliance and customer experience problems.

See our latest analysis for Stride.

The lawsuit headlines land at a tricky moment for Stride, with a recent 3.08% 1 month share price return to 64.61, but a sharply negative 1 year total shareholder return of 39.70% that signals fading momentum despite strong three year and five year gains.

If this legal overhang has you rethinking your exposure to online learning, it could be a good time to broaden your search and explore fast growing stocks with high insider ownership.

With shares down nearly 40% over the past year, yet trading at a steep discount to analyst targets and intrinsic value, is Stride now an overlooked growth story, or is the market correctly pricing in its risks and future trajectory?

Most Popular Narrative Narrative: 38.5% Undervalued

Against Stride's last close at 64.61, the most followed narrative anchors on a fair value near 105, implying substantial upside if its roadmap plays out.

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.

Favorable funding environment, coupled with expanding and diversified state partnerships, enhances revenue predictability and geographic reach, while mitigating concentration risk and creating opportunities for scalable earnings growth.

Read the complete narrative.

Want to see how moderate growth rates still justify a big valuation gap? The narrative leans heavily on rising margins and a disciplined future earnings multiple. Curious how those moving parts combine into that discounted cash flow view? Tap through and unpack the full playbook behind this fair value.

Result: Fair Value of $105 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, lingering execution risks from platform rollouts and tighter enrollment caps could still derail the recovery story and force a reassessment of potential upside.

Find out about the key risks to this Stride narrative.

Build Your Own Stride Narrative

If you are not fully aligned with this view or would rather lean on your own research and insights, you can build a fresh perspective in just a few minutes by starting with 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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Smart investors constantly refresh their opportunity set, and right now you risk missing tomorrow's winners if you stick to a single stock or story.

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.