Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Gannett Are Falling Today

By Bram Berkowitz - May 7, 2021 at 12:09PM

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

America's largest newspaper publisher just reported a bigger loss than expected in the first quarter, and it missed on expectations for revenue as well.

What happened

Shares of Gannett (NYSE: GCI), America's largest newspaper publisher, traded more than 13% lower as of 10:53 a.m. this morning after the company reported earnings results from the first quarter of the year.

So what

Gannett, the publisher of USA Today, reported a net loss of more than $142 million in the first quarter, or a loss of $1.06 per share, on total revenues of $777 million, down from an $80 million loss in the first quarter of 2020 on total revenues of $948 million. Earnings missed analysts' consensus widely, which had Gannett posting a loss of $0.17 per share. Total revenues also came up short.

Line with arrow moving downward.

Image source: Getty Images.

The company did manage to grow paid digital-only subscriptions to 1.2 million, an increase of 37% year over year, which is an important part of Gannett's strategy.

"With the first quarter momentum in both digital-only subscriptions and in our Digital Marketing Solutions segment, we believe we are well positioned to not only meaningfully grow Adjusted EBITDA year over year, but also continue our evolution to a digitally focused content platform," Gannett's CEO Michael Reed said in a statement.

Now what

On one hand, the significant decline in revenues, which the company attributed in part to "general trends adversely impacting the publishing industry" is not good. The traditional publishing industry continues to face challenges.

On the other hand, Gannett has done a lot of work since merging with New Media Investment in 2019 to become the largest newspaper publisher in the country. This work includes refinancing some of its debt and implementing cost synergies, and now the company looks to be pursuing other new avenues for revenue as well.

The company is still saddled with a lot of debt and does face challenges from the industry, but while it's trading at less than $4, I am holding my shares and still think the company has upside.  

Bram Berkowitz owns shares of New Media Investment Group. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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

Gannett Co., Inc. Stock Quote
Gannett Co., Inc.
GCI
$2.36 (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
377%
 
S&P 500 Returns
123%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/09/2022.

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.