Stride(US:LRN) Prnewswire·2025-12-23 15:20Core Viewpoint - The complaint against Stride alleges violations of federal securities laws, including false statements and failure to disclose critical information regarding its products and services, leading to inflated enrollment numbers and compliance issues [2][3]. Group 1: Allegations and Legal Actions - Stride is accused of inflating enrollment numbers by retaining "ghost students" to secure state funding and ignoring compliance requirements such as background checks for employees [3]. - The Gallup-McKinley County Schools Board of Education has filed a complaint against Stride, alleging fraud and deceptive trade practices [3]. - The company faced a significant stock price drop of $18.60, or 11.7%, closing at $139.76 per share following the news of the allegations [4]. Group 2: Financial Performance and Impact - In its first quarter fiscal 2026 results, Stride reported limiting enrollment growth to improve execution, citing "system implantation issues" that led to higher withdrawal rates and lower conversion rates [5]. - The company indicated that these challenges resulted in approximately 10,000 to 15,000 fewer enrollments, which would likely restrict in-year enrollment growth [5]. - Following the financial results announcement, Stride's stock price fell as much as 51% during intraday trading, further impacting investors [5].