Fraud Allegations and Lawsuit Might Change the Case for Investing in Stride (LRN)

• In September 2025, the Gallup-McKinley County Schools Board of Education filed a lawsuit against Stride, Inc., alleging fraud, deceptive practices, and systemic legal violations that prioritized profits over student welfare, particularly impacting Native American students.
• The complaint cites whistleblower testimony and documented declines in graduation rates, raising questions about the long-term risks of for-profit education models tied to public funding and cost control.
• We’ll examine how allegations of enrollment fraud and regulatory noncompliance may challenge Stride’s ability to sustain its growth-focused investment narrative.

Rare earth metals are an input to most high-tech devices, military and defence systems and electric vehicles. The global race is on to secure supply of these critical minerals. Beat the pack to uncover the 28 best rare earth metal stocks of the very few that mine this essential strategic resource.

Stride Investment Narrative Recap

Stride’s investment story remains centered on confidence in the long-term value of digital and career-focused education, supported by steady enrollment growth and expanding partnerships. However, the recent lawsuit from Gallup-McKinley County Schools brings new, material regulatory and reputational risks that could directly impact contract renewals, public funding, and the company’s short-term momentum, making it the most important risk currently facing the business.

The May 2025 termination of Stride’s contract with the same school district involved in the lawsuit is particularly relevant to this risk, highlighting how reputational issues and compliance concerns can translate into real revenue loss and further legal scrutiny for related contracts, even in states where new partnerships are being announced.

By contrast, it’s the ongoing exposure to regulatory and contract loss risk that investors should be aware of…

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.

Uncover how Stride's forecasts yield a $163.75 fair value, a 3% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community members estimate Stride’s fair value from US$106.68 to US$252.43 based on five distinct perspectives. Amid this wide spread, the potential for contract and reputational challenges to disrupt steady revenue forecasts is a key factor separating bullish and cautious outlooks, explore multiple viewpoints to inform your own assessment.

Explore 5 other fair value estimates on Stride - why the stock might be worth as much as 59% 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 3 key rewards 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.

No Opportunity In Stride?

Early movers are already taking notice. See the stocks they're targeting before they've flown the coop:

• Trump's oil boom is here - pipelines are primed to profit. Discover the 22 US stocks riding the wave.
• Explore 24 top quantum computing companies leading the revolution in next-gen technology and shaping the future with breakthroughs in quantum algorithms, superconducting qubits, and cutting-edge research.
• These 10 companies survived and thrived after COVID and have the right ingredients to survive Trump's tariffs. Discover why before your portfolio feels the trade war pinch.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com