What happened

Shares of Cinedigm (CIDM) 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.