Skillsoft's SKIL Plummets 38.6% Amid Strategic Overhaul and Earnings Shock

Summary
• Skillsoft (SKIL) plunges 38.6% intraday to $4.73, its lowest since 2023
• Q3 revenue drops 6% to $129M, with Global Knowledge segment down 18%
• CEO announces strategic review of Global Knowledge, signaling potential divestiture
• Free cash flow turns negative at -$24M, masking TDS enterprise stabilization

Skillsoft’s stock has imploded on a bearish technical backdrop and mixed financial results. The Q3 report revealed a $41M net loss, with the underperforming Global Knowledge segment dragging down revenue and cash flow. While the company highlights AI advancements in its Percipio platform, the strategic pivot and deteriorating fundamentals have triggered a sharp selloff. Traders are now weighing the risks of a legacy business exit against the promise of AI-driven growth.

Strategic Uncertainty and Earnings Shock Trigger SKIL's Freefall
Skillsoft’s 38.6% intraday collapse stems from a perfect storm of strategic ambiguity and deteriorating financials. The Q3 report revealed a $41M net loss, with Global Knowledge’s 18% revenue decline and $28M contribution profit underscoring its drag on performance. CEO Ron Hovsepian’s announcement of a strategic review for the instructor-led training segment—potentially a sale—introduced existential uncertainty. Meanwhile, the TDS segment, while stabilizing with a 99% dollar retention rate, posted a 2% revenue drop and $14M net loss. The market’s reaction focused on the $20.8M goodwill impairment charge and the withdrawal of consolidated guidance, signaling a lack of confidence in management’s ability to turn the business around.

Education Services Sector Mixed as Coursera Gains Ground
The Education Services sector exhibited mixed performance, with Coursera (COUR) rising 1.1% despite Skillsoft’s freefall. While SKIL’s strategic overhauls and earnings misses drove its decline, Coursera’s resilience highlights divergent investor sentiment toward AI-driven upskilling platforms. The sector’s fragmentation underscores the challenge of balancing legacy business exits with innovation bets, with SKIL’s bearish technicals contrasting against peers showing relative stability.

Bearish Technicals and No Options Liquidity: Navigating SKIL's Volatility
• 200-day MA: $16.15 (far above current price)
• RSI: 39.08 (oversold territory)
• MACD: -1.36 (bearish divergence)
• Bollinger Bands: Price at $4.73, below lower band at $6.18

SKIL’s technical profile screams short-term capitulation. The stock is trading at its 52-week low of $4.73, with RSI in oversold territory and MACD in deep negative territory. The 200-day MA at $16.15 is a distant target, suggesting a prolonged bearish trend. With no options liquidity provided and leveraged ETF data missing, the only viable strategy is to avoid further exposure. The K-line pattern confirms a long-term bearish bias, while the 30-day support level at $9.95 is now irrelevant given the current price action. Aggressive short-sellers could target the next support at $4.73, but the lack of options makes this infeasible.

Backtest Skillsoft Stock Performance
The backtest of SKIL's performance after a -23% intraday plunge from 2022 to now reveals a mixed outlook. While the ETF has experienced a maximum return of -0.33% during the backtest period, the overall trend has been negative, with an average return of -1.01% over three days and -2.41% over ten days. The win rates also indicate a higher probability of negative returns, with a 3-day win rate of 45.49% and a 10-day win rate of 46.49%, but a lower 30-day win rate of 41.08%. These results suggest that while there is some volatility, the ETF tends to recover relatively quickly from intraday plunges, but the overall performance remains subdued.

SKIL at Inflection Point: Strategic Clarity or Continued Decline
Skillsoft’s Q3 results and strategic review have created a binary outcome: either the Global Knowledge divestiture unlocks value for TDS, or the stock remains trapped in bearish territory. The 38.6% intraday drop reflects market skepticism about management’s ability to execute a turnaround. With RSI in oversold territory and no options liquidity, the path forward hinges on the success of the AI-driven Percipio platform. Investors should monitor the TDS segment’s $400M–$410M revenue guidance and the pace of Global Knowledge’s exit. Meanwhile, sector leader Coursera’s 1.1% gain highlights the broader tech sector’s fragility. For SKIL, the immediate priority is to break below $4.73 to confirm the bearish thesis—or rally above $5.41 to signal a potential rebound.