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We came across a bullish thesis on Stride, Inc. (LRN) on wallstreetbets subreddit page by Technical-Industry22. In this article, we will summarize the bulls’ thesis on LRN. Stride, Inc. shares were trading at $64.49 as of Oct 22nd. LRN’s trailing and forward P/E were 13.78 and 12.63 respectively according to Yahoo Finance.
School children in a classroom using digital learning services to access educational content.
Stride Inc. (formerly K12 Inc.) is emerging as a notable player in the online education sector, particularly as demand for flexible learning options continues to grow. The company caters to students from kindergarten through 12th grade and adult learners across three primary segments: General Education, which includes public online schools; Career Learning, focused on job training and education programs; and Private Pay Schools, which cater to families seeking customized learning experiences. Stride has capitalized on the shift to online education, which accelerated during the pandemic, leading to impressive revenue growth of over 10% year-over-year. Its latest financials indicate an improvement in gross margins, now around 35%, highlighting the company's efforts to enhance operational efficiency.
Several growth catalysts position Stride for future success. The enduring demand for online education, even as schools reopen, creates opportunities for continued enrollment growth. Stride's strategic acquisitions, such as MedCerts and Tech Elevator, not only diversify its offerings but also strengthen its foothold in the adult education and career training markets. These expansions are timely, given the increasing need for skilled workers in sectors like IT and healthcare. Furthermore, Stride's investments in AI and machine learning for personalized learning platforms could differentiate it in the competitive edtech landscape, enhancing student engagement and learning outcomes.
However, Stride faces several risks that could impact its growth trajectory. The regulatory environment poses challenges, as the company is subject to changes in federal and state policies, particularly affecting its public school programs funded by government resources. The competitive landscape is becoming crowded, with established platforms like Coursera and Khan Academy vying for market share. Moreover, there are concerns about a potential post-COVID slowdown in growth, as schools return to traditional learning methods, necessitating that Stride continues to demonstrate the long-term value of its online model. Profitability remains a concern, with Stride historically facing challenges in achieving consistent margins due to high expenses associated with content development, technology, and student recruitment.