Shares of Entercom Communications (NYSE:ETM) are soaring in morning trading after the radio broadcaster said its chairman emeritus had scooped up 1.2 million shares of the company's outstanding stock at prices ranging from $1.20 to $1.45 per share.
Insider buys are often perceived by the market as bullish signals, and the purchases by Joseph Field amounted to approximately 1% of Entercom's float. Field now owns approximately 11% of the broadcaster's outstanding stock, or about 15.1 million shares.
With the stock having closed at $1.43 per share yesterday, the purchase caused them to soar 20% to $1.72 per share.
While the vote of confidence is driving investor enthusiasm, there are concerns about the effect the COVID-19 pandemic will have on the business. Radio is reportedly seeing declines in ad spend ranging between 40% and 70%, and in its earnings report last week, Entercom noted that where its revenue had been up 7% in the quarter prior to the coronavirus outbreak, it subsequently ended down 4%.
It also drew down the entirety of its revolving credit line, giving it $1.8 billion in long-term debt and just $189 million in cash.