Small-cap ed tech Stride slides on Claude for Teachers unveiling

Shares of Stride, a mid-cap developer of an ed tech platform, dipped 5.6% on Tuesday after Anthropic announced the launch of Claude for Teachers, a program that gives educators free access to Claude's premium features and education tools.

Stride fell 5.6% on the New York Stock Exchange on Tuesday to close at $86.90 per share. Anthropic announced the launch of its free Claude for Teachers program, which helps K-12 teachers to plan lessons, create assessments, and access academic curricula.

The launch directly affects Stride's business and has raised concerns about the company's competitive position. Given Stride's recent technology issues, which resulted in elevated user attrition, schools may look for alternative platforms, weakening the company's market position, Bloomberg Intelligence analyst Nicole D'Souza said. At the same time, she thinks it remains to be seen whether Claude for Teachers can replace Stride and similar products.

Stride has faced a series of setbacks in recent months. A month ago, on June 15, the company lost a contract with a Texas school district, which sent its shares down 14.5% in a single session.

A year earlier, a school district in New Mexico terminated its contract with Stride, citing serious violations by the company, including failure to comply with the state's student-to-teacher ratio requirements. The district alleged that Stride may have misrepresented those figures in other jurisdictions as well, allowing it to generate hundreds of millions of dollars in additional revenue.

School districts make a significant contribution to Stride's top line, as the company offers an alternative in publicly funded virtual schools, GuruFocus noted. In its latest earnings report, the company did not disclose what portion of its revenue comes from government contracts. Overall, revenue for its fiscal third quarter ended March 31 increased 2.7% year over year to $629.9 million, while the net income fell around 11% to $88.5 million.

Another challenge stemmed from technical issues related to the rollout of a platform upgrade in mid-2025, which prevented the company from enrolling 10,000-15,000 students. The day after that information went public, Stride shares plunged 54%. Several Wall Street analysts subsequently downgraded their ratings and/or lowered their target prices on the stock.

However, most analysts remain optimistic. Wall Street has four "buy" calls on the stock, versus one "hold" rating and no "sell" recommendations. The average target price is $121.20 per share, implying 39.5% upside from the latest closing price.