What happened

Shares of National CineMedia (NASDAQ:NCMI) tumbled as much as 28.8% lower on Friday morning, hamstrung by a weak first-quarter earnings report with a side of soft revenue guidance. As of 11:45 a.m. EDT, the stock was down 25.3%.

So what

In the first quarter of 2017, the vendor of ad materials for movie theaters saw sales falling 5.6% year over year to land at $71.9 million. Adjusted OIBDA, a non-GAAP earnings measure that excludes non-cash charges such as depreciation and amortization, fell 27% to $17.6 million. Adjusted net losses widened by 60%, stopping at $0.08 per diluted share.

Both the revenue and earnings results fell short of Wall Street's expectations.

Twitter logo in National Cinemedia's First Look ad product for the silver screen.

Image source: National CineMedia.

Now what

Looking ahead, National CineMedia CFO Katie Scherping outlined soft demand for high-priced scatter advertising time and shifting order mixes in the company's core client categories. Based on these market trends, the top end of management's full-year revenue guidance fell below the lowest analyst projection for the same metric. Paired with the disappointing first-quarter performance, this was enough to send shareholders looking for the exits.

Scherping described 2017 as a year of transition, with a new management team looking for fresh industry partnerships. National CineMedia is attempting to evolve from the movie theater to your favorite internet-connected device, but the company is meeting a powerful batch of brand-new competitors in that transition and might not have what it takes to succeed in online advertising.

National CineMedia shares prices have now fallen 40% year to date. Investors should tread with care around this risky turnaround stock, at least until the upswing actually starts. This report certainly wasn't it.