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Skillsoft Plummets 69% YTD: Should You Buy the Stock or Hold Back?

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Key Takeaways

  • Skillsoft has dropped 69.2% YTD, while peers and its industry posted gains.
  • AI-focused products boosted platform usage and reduced development expenses for Skillsoft.
  • Skillsoft lowered the FY26 revenue guidance amid weak federal and discretionary spending.

Skillsoft Corp. (SKIL - Free Report) shares have plummeted 69.2% in the year-to-date period against 22.4% growth in its industry and a 20.7% rise in the Zacks S&P 500 Composite.

SKIL underperformed its industry peers, JBT Marel Corporation (JBTM - Free Report) and MediaAlpha (MAX - Free Report) . JBT Marel and MediaAlpha have rallied 9.9% and 17.8%, respectively.

YTD Share Price Performance

 

Zacks Investment ResearchImage Source: Zacks Investment Research

 

The six-month performance highlights that SKIL has underperformed JBT Marel and MediaAlpha. Skillsoft has declined 58.2% against JBT Marel’s and MediaAlpha’s 12.9% and 20% growth, respectively.

Let us analyze further to find out whether investors should buy the dip or hold the company’s shares for the time being.

Skillsoft’s AI Game Appears Strong

SKIL’s AI-fueled innovation, aimed at intelligent learning design, skills intelligence and engaging learning experience, is essentially its path to success. The company’s global workforce managed to earn more than 20,000 certificates in cloud, data and AI, cybersecurity, and service management. It shows the heightened demand for scalable, critical learning solutions as companies familiarize themselves with the shift in workforce and AI technology. Catering to this demand requires Skillsoft to incorporate a product strategy aimed at AI-embedded design, skills intelligence and flexibility.

Leveraging AI-backed content and a tailored learning plan, Skillsoft made improvements in a global semiconductor manufacturer’s learning ecosystem for 43,000 employees in the second quarter of fiscal 2026. This displays the company’s inclination toward AI-led innovation and skills intelligence.

Additionally, SKIL’s Percipio platform showed significant improvement in AI learners by 74% year over year and AI learning hours by 158%. This growth is a testament to the company’s success in AI-driven strategy and ability to capture the market demand for AI upskilling solutions. The company’s inclination toward AI led to a lowering of content and software development expenses by 5.9% year over year.

SKIL’s Capital Return Tops Industry, Valuation Discounted

Return on equity (ROE) is a profitability metric that assesses how effectively a company utilizes shareholders' equity to generate earnings. By the end of the second quarter of fiscal 2026, SKIL’s ROE was 16.03%, beating the industry’s 15.29%. It reflects that SKIL is likely to be more efficient in generating higher returns on its equity base.

 

Zacks Investment ResearchImage Source: Zacks Investment Research

 

SKIL is trading at 1.48 times forward 12-month price-to-earnings, significantly below the industry average of 26.64 times. Skilsoft’s trailing 12-month EV-to-EBITDA ratio stands at 2.92, substantially lower than the industry average of 18.46. It highlights Skillsoft’s undervaluation, which may lead to future price hikes as the market recognizes the stock’s true value.

 

Zacks Investment ResearchImage Source: Zacks Investment Research

 

Zacks Investment ResearchImage Source: Zacks Investment Research

 

SKIL Cuts Its FY26 Guidance

During the recent earnings call, management disclosed that it made a downward revision of fiscal 2026 revenue guidance. In the first quarter of fiscal 2026, revenues were expected to be $530-$545 million. However, witnessing the consistent and unexpected weakness in federal spending and lower discretionary spending affecting the Global Knowledge segment, management decided to slash its full-year guidance to $510-$530 million.

A lowered guidance indicates that the company may not meet its internal targets. Along with this uncertainty, likely macroeconomic headwinds could impact growth. Investors often see a reduction in guidance as a warning sign since it is viewed as a loss of control, leading to selling pressure and a subsequent drop in share prices.

Skillsoft’s Weak Liquidity Position

In the second quarter of fiscal 2026, SKIL’s current ratio was 0.85, declining from 0.88 in the year-ago quarter due to a dip in cash reserves. Furthermore, it lags the industry average of 1.58. It is important to note that a current ratio of less than 1 portrays the company’s inefficiency in meeting its short-term obligations.

 

Zacks Investment ResearchImage Source: Zacks Investment Research

 

SKIL’s Bleak Top & Bottom-Line Outlook

For fiscal 2026, the Zacks Consensus Estimate for revenues is pinned at $515.9 million, indicating a 2.8% year-over-year decline. The consensus mark for earnings per share is pinned at $3.48, suggesting a 19.6% year-over-year dip.

Hold Skillsoft for Now

SKIL’s future success depends on its AI-driven innovation that showed promising results in terms of improving AI learners and AI learning hours by 74% and 158% year over year, respectively. Alongside this trajectory, a discounted valuation and strong capital return present a long-term upside.

However, near-term challenges are lingering. Operational headwinds due to lower discretionary spending and softness in federal spending compelled management to cut down top-line guidance for fiscal 2026. That being said, the stock appears fundamentally weak for the full year, which, when combined with a bleak liquidity position, is a severe red flag for investors.

We recommend investors have a wait-and-see approach. Investors who already hold this stock should refrain from increasing their investment. Potential buyers are urged not to invest currently and wait for an upside.

Skilsoft has a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.


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