Stride Bets on Tutoring and AI: Will New Investments Pay Off?

Stride, Inc. LRN closed fiscal 2025 with another record year, underscoring its momentum in the school choice movement. Fourth-quarter revenues climbed 22% year over year to $653.7 million, while adjusted EPS of $2.29 topped estimates by 25.1%. Career Learning was the star, with revenues up 35% and enrollments jumping 33%, reinforcing its role as a leader in digital education.

Looking ahead, Stride is shifting focus from pure scale to innovation. Management is investing heavily in tutoring, particularly “high-dosage” reading support for second and third graders. With more than 100,000 sessions already hosted last year, the initiative is aimed at addressing critical literacy benchmarks that shape long-term learning outcomes. Stride also plans to expand its external tutoring platform, leveraging certified U.S.-based teachers to capture state-funded demand.

Artificial intelligence is another priority. Rather than chasing hype, Stride is embedding AI into its programs cautiously, thereby improving efficiency, enriching tutoring, and enhancing student-teacher engagement. These initiatives, however, come with a trade-off — gross margin expansion of 180 basis points (in fiscal 2025), which is expected to moderate as investments scale.

The challenges remain clear. Stride’s Adult Learning segment continues to underperform, and regulatory caps in some states limit enrollment flexibility. Still, with double-digit enrollment growth projected for the first quarter of fiscal 2026 and a favorable funding environment across key states, Stride’s long-term trajectory looks solid. For investors, the question is whether tutoring and AI can evolve from cost centers into durable growth engines.

Competitive Landscape: Chegg and Coursera in Focus

As Stride accelerates investments in tutoring and AI, competition is intensifying from U.S.-based peers like Chegg, Inc. CHGG and Coursera, Inc. COUR. Chegg has established itself as a leader in online tutoring and homework support, with AI-powered study tools increasingly central to its platform. The company is pushing deeper into personalized learning solutions, seeking to capture students through affordability and accessibility. This positions Chegg as a direct rival to Stride’s tutoring initiatives, though Stride differentiates with its certified-teacher K–12 model.

Coursera, meanwhile, has built a global footprint with partnerships across universities, corporations, and governments. Coursera is embedding AI to personalize coursework, strengthen tutoring options, and enhance career-focused training. Like Stride, Coursera is targeting long-term skill-building but primarily caters to adult learners. The growth of Coursera underscores the broader EdTech race, pressuring Stride to prove that its K–12 specialization can deliver sustainable advantages.

LRN Stock’s Price Performance & Valuation Trend

Shares of this Virginia-based education company have trended upward 35.5% year to date, outperforming the Zacks Schools industry, as shown below.

LRN Share Price Performance

LRN stock is currently trading at a premium compared with its industry peers, with a forward 12-month price-to-earnings (P/E) ratio of 16.11, as shown in the chart below.

Earnings Estimate Revision of LRN

LRN’s earnings estimates for fiscal 2026 have moved north over the past 60 days to $8.58 per share. The revised estimated figure for fiscal 2026 implies year-over-year growth of 5.9%.
 

LRN stock currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research