Loop Media, Inc. (NYSE: LPTV) experienced a tumultuous afterhours session on Friday, following the release of its Q2 financial results. While the stock showed a modest climb of nearly 0.6% during the trading day, it took a severe hit post-market, plummeting by almost 15%.
The sudden downturn caught investors off guard, especially considering the stock’s typically low trading volume. However, Friday saw over a million shares exchanged, a significant uptick from its usual daily average of fewer than 200,000 shares.
Troubling Earnings Report
The company’s Q2 earnings report revealed troubling figures, with revenue plummeting by 26% to $4 million from $5.4 million in the previous year. Gross profit margins also took a nosedive, dropping by a staggering 78% to $400,000. The net loss narrowed slightly to $7.6 million, compared to $9.8 million in the previous year, translating to a loss per share of $0.11.
One bright spot amidst the gloom was the adjusted EBITDA, showing a reduced loss of $4.5 million from $5.6 million in the prior year. Additionally, total net debt decreased to $6 million from $7.1 million in the previous quarter.
Broader Industry Troubles
The challenging ad market environment played a significant role in the company’s poor performance, with a major ad demand participant altering terms with ad publishers, severely impacting Loop Media’s ad revenue. Despite efforts to restore demand, changes in algorithms led to a reduction in the frequency of ad calls and fills.
Loop Media is undergoing a strategic transition, focusing on targeted distribution models to bolster Quarterly Active Users (QAU) and enhance its platform for advertising partners. The company doubled partner screens, reaching 50,000, a 108% increase from the previous year.
Analysts note that Loop Media remains a work in progress, with bulls highlighting the company’s cost-cutting measures and strategic shifts. However, uncertainties persist regarding the effectiveness of these strategies in mitigating the challenges posed by the evolving ad market landscape.
Conclusion
In conclusion, Loop Media’s afterhours plunge underscores the importance of addressing fundamental challenges while capitalizing on strategic opportunities to navigate volatile market conditions effectively.
