Please ensure Javascript is enabled for purposes of website accessibility

Why Eros STX Stock Crashed Today

By Evan Niu, CFA – Aug 4, 2021 at 11:44AM

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 entertainment company won't be able to file its annual report on time, which is causing issues related to outstanding debt.

What happened

Shares of Eros STX Global Corporation (ESGC) have crashed today, down by 18% as of 11:20 a.m. EDT, after the company requested an extension to file its annual report with the SEC. It also provided investors with an update regarding its debt restructuring efforts.

So what

The entertainment company, which produces TV and films, warned that it needed more time to scrutinize its books. Eros STX said that it expects to find material weaknesses in its internal controls for financial reporting, and that it is unsure when it will conclude its review.

Red stock chart going down with columns of numbers in the background.

Image source: Getty Images.

"The Company is unable to file its Annual Report on Form 20-F for the fiscal year ended March 31, 2021 by the August 2, 2021 due date, without unreasonable effort or expense, primarily because the Company's Audit Committee is currently conducting a formal internal review of certain accounting practices and internal controls related to its Eros subsidiaries," Eros STX wrote in a regulatory filing. "Significant revenue from these subsidiaries may not have been appropriately recognized during the fiscal year ended March 31, 2020."

Now what

The delay has created issues related to some of Eros STX's debt, as the company has an outstanding debt that comes due within the next year and those credit agreements required Eros STX to deliver audited financial statements by July 31, 2021. The company says that it is negotiating with its lenders, attempting to secure a waiver and extension of the deadline.

Evan Niu, CFA has no position in any of the stocks mentioned. 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

Eros STX Global Corporation Stock Quote
Eros STX Global Corporation
$0.30 (%)

*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 11/26/2022.

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.