Stride is accused by this school board of municipalities in the state of New Mexico of inflating revenues by enrolling “phantom students” in order to receive more state funding (since Stride’s revenues depend almost entirely on state governments, with reimbursements paid per student).

It is also accused of having only 1 teacher for every 200 students, of suppressing whistleblowers, and of choosing to maintain “Wall Street margins over the futures of our children.”

They also point out that student outcomes declined from a graduation rate of 54% in 2023 to just 27.67% in 2024. The court case seeks repayment of the state funds in triple.

Indeed, Stride’s margins (if we consider adjusted results, the net margin for fiscal year 2025 was 15.5%) are excessively fat for a company funded by the state to provide education mainly to disadvantaged and rural populations.

And for 2026, as seen above, analysts expect profit to be $402.2 million on sales of $2.67 billion, once again implying a net margin of around 15%.

Perhaps that will happen, but the situation seems unsustainable in the long term…

Possibly, if margins and multiples actually contract, we may once again consider Stride under $100 per share.