What Happened?

Shares of educational publishing and media company Scholastic (NASDAQ:SCHL) fell 14.6% in the morning session after the company reported disappointing third-quarter results, which fell below Wall Street's expectations across the key metrics we track, including its revenue, EBITDA, and EPS. Sales fell year on year due to timing-related factors in the Children's Book Publishing and Distribution segment and lower supplemental curriculum and collections product sales in Education Solutions. Overall, this was a weaker quarter.

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What The Market Is Telling Us

Scholastic’s shares are somewhat volatile and have had 11 moves greater than 5% over the last year. But moves this big are rare even for Scholastic and indicate this news significantly impacted the market’s perception of the business. The biggest move we wrote about over the last year was 5 months ago when the stock dropped 15.2% on the news that the company reported weak second quarter earnings results. Its revenue and EPS fell short of Wall Street's estimates. Revenue declined 10% due to resizing efforts (mostly affected Book Club revenue) to create a smaller, more profitable core business. In addition, the weakness was attributed to "lower supplemental curriculum product sales in Education Solutions and lower revenue per fair in the U.S. Book Fairs channel." Overall, this was a bad quarter for Scholastic.

Scholastic is down 44.4% since the beginning of the year, and at $21.16 per share, it is trading 47.7% below its 52-week high of $40.47 from February 2024. Investors who bought $1,000 worth of Scholastic’s shares 5 years ago would now be looking at an investment worth $506.70.

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