KinderCare Learning (KLC) Plunges 24.00% on Guidance Cut, Weak Q3 Results

The share price dropped to a record low today, with an intraday decline of 24.00%.

KinderCare Learning (KLC) slashed its full-year 2025 guidance, cutting adjusted EPS expectations from $0.77 to $0.82 to a range of $0.64 to $0.67 and reducing revenue forecasts from $2.75 billion to $2.8 billion to $2.72 billion to $2.74 billion. The move followed weaker-than-expected third-quarter results, including a 61% year-over-year drop in net income to $4.55 million and a $5.81 million revenue shortfall. The revised guidance, below analyst expectations, underscored persistent operational challenges, including inefficiencies in scaling high-performing centers and broader economic headwinds.

Shares tumbled 16% in pre-market trading to $4.19, with an intra-day low of $3.80. Analysts responded with downgrades, including Morgan Stanley cutting its rating to Equal-Weight with a $6 price target from $11, and UBS reducing its target to $4.50 from $10. The CEO, Paul Thompson, emphasized “operational efficiency” and near-term stabilization, but investors remained skeptical of management’s ability to reverse a 12-month stock decline exceeding 75%. Structural concerns about the childcare sector’s sensitivity to inflation, labor costs, and consumer behavior further weighed on sentiment.

While KLC highlighted “strong Champions” performance and employer engagement, the market interpreted these as insufficient to offset recurring revenue underperformance. The stock’s collapse reflects a loss of confidence in the company’s growth model, with analysts questioning whether cost-cutting and restructuring can restore profitability in a high-inflation environment. Investors will likely monitor the firm’s ability to align its efficiency-driven strategy with sector-specific risks in the coming quarters.