Why Scholastic Stock Was Flopping on Friday

Key Points

• The academic and children's media company boosted its revenue but recorded a net loss in its inaugural quarter of fiscal 2026.

• It was affected by budgetary shifts in public schools.

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Academic publications specialist Scholastic (NASDAQ: SCHL) wasn't looking like a wise investment at the end of the trading week. On Friday in late-session action its shares were down by nearly 12% in value, at a point when the S&P 500 index was up by 0.4%. The market clearly didn't like what it saw in the company's freshly published quarterly earnings report.

Booking a loss

Scholastic opened the book on its fiscal first quarter of 2026 just after market close Thursday. It revealed that revenue for the period was $225.6 million, which was down by nearly 12% year over year. On a slightly brighter note the company's operating loss narrowed a bit, coming in at $81.9 million ($2.52 per share) against the year-ago shortfall $85.6 million.

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Both figures were under the consensus analyst estimates. Collectively, pundits tracking the stock were modeling more than $240 million for revenue, and a narrower net loss of $2.45 per share.

Scholastic, which depends on municipal and local budgets since many of its end customers are public schools, said that "funding uncertainties" for such institutions negatively affected it during the quarter. This was felt particularly in the company's education solutions unit, which saw a 28% drop in revenue to slightly over $40 million.

Anticipating top-line improvement

In its earnings release, Scholastic reaffirmed its guidance for the entirety of the current fiscal year. It believes its non-GAAP (adjusted) earnings before interest, taxes, depreciation, and amortization (EBITDA) will land at $160 million to $170 million, on revenue that should be 2% to 4% higher than that of the previous fiscal year.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.