Moviemaker Lions Gate
Unfortunately, I can no more explain why the stock is down now than I can tell you why it shot up in after-hours trading on Friday. The only thing that has changed about Lions Gate between Friday afternoon and today is that a couple of bits of good news broke. Seeking Alpha published a transcript of the company's post-earnings conference call (by the way, thanks, guys). In it, we learned that Lions Gate CEO Jon Feltheimer promised to generate "$100 million in free cash flow every year," and more specifically asserted: "We are definitely heading yet again to another year [meaning this one] over $100 [million] in free cash flow" (before warning that "it's still too early to tell you what kind of growth we might expect for next year").
Also on this call, the company -- which produced Missing for Disney
This is hardly the kind of news you'd expect to bring a stock down. Conversely, the news on Friday wasn't exactly of the sort calculated to move the stock up, either. Revenue was up 57% in comparison to last year's Q2. But costs rose even more sharply, taking a saw (pardon me) to Lions Gate's profits. Direct operating costs nearly doubled year over year, and marketing spending rose by two-thirds. Result: The company reported net, and even operating, losses for the quarter. Per share, the net loss was $0.47, even worse than expected.
And the scariest part of all? Lions Gate grew its share count by 14% over the past year. Without all those extra shares to spread the losses around, the firm's per-share loss would have been even bigger.
Which moviemakers do the folks at Motley Fool Stock Advisor prefer to Lions Gate? My mouse ears point me to Disney. Preview the newsletter for 30 days, absolutely free, to discover what other companies in the Stock Advisor family enjoy producing movies.