Stride, Inc. (LRN): A Bull Case Theory

We came across a bullish thesis on Stride, Inc. on Valueinvestorslcub.com by scott265. In this article, we will summarize the bulls’ thesis on LRN. Stride, Inc.'s share was trading at $84.60 as of January 30th. LRN’s trailing and forward P/E were 12.91 and 11.14 respectively according to Yahoo Finance.

Stride, Inc., together with its subsidiaries, provides proprietary and third-party online curriculum, software systems, and educational services in the United States and internationally.  LRN appears materially mispriced following a sharp and, in our view, overdone sell-off driven by operational noise rather than a deterioration in the underlying business. The company operates a virtual K–12 education platform, serving roughly 250,000 students across nearly 100 schools in choice-friendly states, with revenues largely paid by school districts rather than students.

Its model combines proprietary curriculum with school operations, offering general, AP, and vocational programs that appeal to rural families, homeschoolers, and students seeking safety, flexibility, or broader course offerings. Despite recent challenges, LRN remains a stable, recurring-revenue business with high incremental returns, roughly $500 million of EBIT on only $600 million of invested capital, and approximately $10 per share in net cash.

Two weeks ago, LRN cut guidance after a poorly executed rollout of a new learning management system disrupted enrollment during the August intake period, leading to the loss of an estimated 10–15 thousand incremental students and a modest reduction in expected EBIT. The issues, while serious, were operational rather than demand-driven, and feedback from parents suggests most functionality problems have largely been resolved, with a redesigned parent interface slated for January 2026. Importantly, enrollment and EBIT still grew around 5% despite these setbacks, and management continues to emphasize strong underlying demand, consistent with competitor performance.

Subsequent stock weakness was exacerbated by recycled regulatory headlines around isolated school-level issues in Texas and New Mexico, all of which are either immaterial in scale or already resolved through student transfers within LRN’s own network. Unlike for-profit colleges, LRN’s diversified school base, district-funded model, and transferable student structure significantly reduce regulatory and reputational risk.

At roughly 4x forward EBIT, versus a historical multiple near 15x, the valuation disconnect is stark. With a large buyback underway targeting nearly 20% of shares outstanding, even modest normalization in growth and sentiment could drive substantial upside, while downside appears limited absent a severe and sustained enrollment collapse.

Previously, we covered a bullish thesis on Stride, Inc. (LRN) by Technical-Industry22 in October 2024, which highlighted the company’s exposure to online K–12 education, enrollment growth, margin improvement, and long-term demand for flexible learning models. LRN’s stock price has appreciated by 31.18% since our coverage. Scott265 shares a similar thesis but emphasizes valuation dislocation driven by temporary operational issues, capital returns, and downside protection.

Stride, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 39 hedge fund portfolios held LRN at the end of the third quarter which was 41 in the previous quarter. While we acknowledge the potential of LRN as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.