Please ensure Javascript is enabled for purposes of website accessibility

Why Cinedigm Stock Jumped 29% at the Open Today

By Reuben Gregg Brewer - Apr 14, 2021 at 10:32AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company updated investors on its business transition, and the news was obviously well received.

What happened

Shares of Cinedigm (CIDM 0.00%) rose a quick 29% on April 14. That's a pretty sizable gain, with the excitement almost certainly driven by a business update put out this morning.

So what

Cinedigm's historical business is tied to the movie theater space. That business has been under significant pressure thanks to the coronavirus pandemic and the increasing consumption of streamed content. However, management has been working to shift with the times and is building a niche streaming business consisting of small and focused subscription services and advertising-supported streaming. According to the most recent update, which looks at March data, material progress has been made in this new business line.  

Two people watching TV on a couch.

Image source: Getty Images.

In March, Cinedigm's "total streaming viewer footprint" was 23.8 million "active ad-supported viewers." This number includes both linear streaming, which is like regular television delivered over the internet, and on-demand streaming. That's up 208% from the same month in 2020. On the subscription side of the business, the company increased its channel count from five to 16, largely thanks to acquisitions, and had 640,000 subscribers, up 574% year over year. It's understandable that investors would see this progress in a positive light, as it clearly shows material progress is being made as Cinedigm looks to grow its streaming operations.   

Now what

Cinedigm's stock is up more than 200% over the past year, but it has been something of a roller-coaster ride. In fact, at one point over that span the stock was higher by more than 750%, with a couple of big spikes and declines along the way. Conservative long-term investors will probably want to sit on the sidelines until Cinedigm's transition is further along. Indeed, in the most recent quarter, the company's loss increased 40% to $0.07 per share. Right now it seems as if the peaks and valleys may be driven more by emotion than the company's underlying financial results.  

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Cinedigm Corp. Stock Quote
Cinedigm Corp.
$0.51 (0.00%) $0.00

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/06/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.