Stride (LRN) is under heavy legal scrutiny as several investor lawsuits allege the company inflated enrollment numbers and overlooked compliance standards. This increased attention has been accompanied by a sharp negative shift in investor sentiment.

This string of legal challenges has weighed heavily on Stride’s share price, with a 90-day share price return of -61.07% and a one-year total shareholder return near -41%. Short-term momentum is clearly fading, which stands in stark contrast to the company’s healthy multi-year gains, such as its 185% total return over five years.

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With Stride’s share price now deeply discounted compared to analyst targets, the key question for investors is whether current levels reflect all the operational risks or if the turbulence has opened the door to a genuine buying opportunity.

Most Popular Narrative: 45% Undervalued

Stride is trading at $63.53, and the most widely followed narrative pegs fair value much higher. This signals substantial upside potential and sets the scene for a closer look at the driving forces behind this valuation.

Persistent double-digit enrollment growth and robust application volumes signal accelerating demand for flexible, digital, and alternative education offerings. This implies sustainable revenue growth as families seek personalized, remote learning options.

Are you wondering which key growth levers could justify this lofty target? The answer is found in a blend of accelerating digital demand, ambitious profit margins, and a future valuation multiple that exceeds sector norms. Want to see how analysts think these trends translate into valuation? Dive in for the detailed calculations and surprises included in this narrative.

Result: Fair Value of $115.50 (UNDERVALUED)

However, limits on enrollment growth and unforeseen funding risks could dampen Stride’s future earnings potential. This puts this bullish narrative to the test.

Build Your Own Stride Narrative

If you see things differently, or want to shape your own view based on the data, you can pull together your own narrative in just 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.