Stride (LRN) Stock Plummets 50% After Earnings

Ticker: LRN
Price (Oct 29, 2025): ~$75.20 per share (close) ^[1].
Recent Movement: Stock dropped over 50% on Oct. 29 after falling from ~$153 to ~$75 ^[2].
Quarterly Results (Q1 FY2026): Revenue $620.9M (up 12.7% YoY) vs. $613.7M consensus; EPS $1.40 diluted (beat $1.13) ^[3].
Guidance Miss: Company guided Q2 FY2026 revenue at $620–$640M (vs. ~$648M expected) and full-year $2.48–$2.55B (vs. ~$2.67B consensus) ^[4].
Analyst Reaction: Barrington cut its 12-month target to $125 (Outperform) ^[5], Morgan Stanley to $130 (Equal Weight) ^[6], and BMO to $108 (Market Perform) ^[7].
Investor Alerts: Earlier in Oct., a New Mexico school district’s SEC complaint alleged Stride inflated enrollments and violated state rules, earlier sending shares down ~11% ^[8] ^[9].
EdTech Context: Despite the selloff, Stride is still up ~44% YTD (vs. ~10% for the S&P 500) ^[10]. The broader EdTech market remains strong (projected ~15–17% CAGR to 2030, ~$700B global market) ^[11].

Earnings Beat Overshadowed by Weak Outlook

Stride, Inc. (NYSE: LRN) delivered strong fiscal Q1 2026 results (ended Sept. 30, 2025), but a conservative outlook triggered a sharp selloff. The company reported revenue of $620.9 million, beating the $613.7M analyst consensus, and diluted EPS of $1.40, above the $1.13 estimate ^[12]. Enrollments grew 11.3% YoY (to 247,700 students), led by 20% growth in Career Learning programs ^[13]. CEO James Rhyu noted “strong enrollment growth” to start the year but cautioned that growth rates will moderate ^[14]. These results continued Stride’s string of double-digit growth quarters.

However, forward guidance disappointed investors. Management forecast Q2 revenue of $620–$640 million, below Wall Street’s ~$648–$649M estimate, and FY2026 revenue of $2.48–$2.55B, undercutting the ~$2.67B consensus ^[15]. In other words, the outlook implied ~11–14% full-year growth (down from ~15% expected) ^[16]. Stride cited potential headwinds – including a phased platform rollout and enrollment softness – as reasons to temper expectations. The official press release confirmed these outlook ranges ^[17] ^[18], but it was the gap versus analysts’ forecasts that spooked the market.

Market Reaction: Stock Sinks on Guidance Miss

The market’s response was swift and severe. On Oct. 28’s close, Stride traded around $152 per share. After-hours trading saw LRN “plunge over 34%… to roughly $100” ^[19] as news of the weak guidance spread. By Oct. 29, the stock opened near $100 and ultimately closed around $75.20, a 51% one-day drop ^[20] that erased about $2 billion of market value. TS2.tech aptly described this swing as a “rollercoaster”: “Stride Stock Crashes on Weak Guidance After Earnings Beat” ^[21] ^[22].

For context, Stride’s share price had more than doubled over the prior 12 months (peaking near $171) amid rising enrollments and prior quarters of outperformance ^[23]. Even after the plunge, the stock remains about 44% above its level a year ago ^[24]. But the sudden fall has flipped its near-term technical outlook to bearish, raising questions about momentum. As TS2 notes, TipRanks’ automated sentiment models still rated LRN a “Buy” as of late October ^[25], but the crash introduced a clear downtrend. Stride’s 52-week low prior to this event was ~$63, highlighting how unusual a one-day ~50% swing is for the stock ^[26].

Analyst Updates and Forecasts

Following the earnings news, analysts rushed to adjust their views. Barrington Research – previously bullish – cut its 12-month target to $125 (Outperform), commenting that “the damage has been done” but the stock should find support at current levels ^[27]. Morgan Stanley lowered its price objective to $130 (Equal Weight), forecasting that enrollment headwinds would force FY2026 revenue and operating income down roughly 7–12% from prior estimates ^[28]. BMO Capital Markets notably downgraded LRN to Market Perform with a $108 target, citing the “disappointing” FY2026 outlook and warning that fall enrollment rollouts could constrain growth ^[29].

These target cuts come on top of other recent cautious moves. (TipRanks data show both Morgan Stanley and Canaccord lowering targets into the mid-$120s, and one firm calling Stride “a sell” in the immediate wake ^[30] ^[31].) Before earnings, all five covering analysts rated Stride Buy/Outperform with an average target ~$150 ^[32]. The sharp guidance miss has narrowed upside, with even bulls acknowledging a tougher near-term landscape.

Competitive and Sector Context

Stride operates in the booming EdTech space but faces different market dynamics than consumer-focused peers. For example, Chegg (CHGG) – known for college learning tools – has struggled recently, shedding subscribers amid AI competition. In contrast, Stride’s full-time K-12 and career education programs have seen strong demand: A June 2025 analysis noted Stride’s record enrollment growth (Career Learning enrollment +32% YTD) while Chegg’s revenues fell ~30% ^[33] ^[34]. Stride also trades at higher valuation multiples (forward P/S) than Chegg, reflecting its growth profile ^[35].

Other online learning names have similarly mixed signals. JPMorgan analysts, for instance, see long-term growth in U.S. EdTech – highlighting companies like Coursera and Duolingo as growth stories ^[36] ^[37] – but note that near-term results can be volatile. Indeed, industry watchers point out that even solid businesses can see big one-day moves: last year, Chegg fell 48% in one session when warning that ChatGPT was hurting its subscription growth ^[38]. Stride’s core K-12 model is arguably more insulated from consumer AI trends, but the episode underscores how quickly sentiment can change if any growth cracks appear.

Overall, the broader EdTech sector remains on an upward track – global spending on digital learning is projected to grow ~15–17% annually through 2030 ^[39] – but investors are honing in on execution. Stride’s latest results confirm the large market opportunity (the company still boasts ~$750M cash and growing margins ^[40]), yet the cautious tone has investors asking whether the company can sustain its recent pace.

Investor Sentiment and Outlook

Investor sentiment swung from exuberance to caution. Leading up to earnings, Wall Street was “broadly bullish” on Stride – TipRanks notes a consensus Buy rating and $140–$150 average price target ^[41]. After the guidance shock, many view the pullback as an overreaction or a buying opportunity. Some analysts, including those at TipRanks, argue the company’s “strong financial results and strategic growth initiatives” still merit a bullish stance ^[42]. Others warn the stock is now “resetting” expectations: it must demonstrate its ability to execute under tougher enrollment conditions.

For now, Stride’s stock is likely to stay volatile. Its earnings momentum is intact (management reiterated investment in AI-driven tutoring and curriculum development even as they tighten spending ^[43]), but execution risks (from platform rollouts or regulatory overhang) remain in focus. On Oct. 29, after that steep drop, the stock rebounded somewhat as markets digested the news, but it ended the day well off recent highs ^[44].

Looking ahead, analysts and investors will watch whether Stride can meet its lower guidance and return to growth. If the company can sustain enrollment gains and profit improvements, many strategists believe the stock’s long-term trend is still upward. For example, Barrington and others still maintain Outperform views – pointing to Stride’s scalable contracts and curriculum moat. Yet in the short term, the bar is lowered: Friday’s selloff means new catalysts (like Q2 results or resolution of legal issues) will be needed to rekindle upside.

In summary, Stride’s latest episode highlights a classic market dynamic: “strong results, weak guidance.” As one market observer put it, “yesterday’s great earnings don’t guarantee tomorrow’s growth.” The stock’s plunge on Oct. 29 reflects this cautious reset. Investors will be watching closely in coming weeks as Stride delivers on its new forecasts and as the broader EdTech trends continue to unfold ^[45] ^[46].

Sources: Stride press releases and filings ^[47] ^[48] ^[49]; TechStock² (TS2.tech) analysis ^[50] ^[51] ^[52] ^[53]; Benzinga market reports ^[54] ^[55]; investing.com historical data ^[56]; analyst news (TipRanks/TheFly) ^[57] ^[58] ^[59]; competitor comparisons ^[60] ^[61]; sector trend reports ^[62]; Hagens Berman legal alert ^[63] ^[64].

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Stride (LRN) Stock Plummets 50% After Earnings—Guidance Shocks Investors