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Why AirMedia Group Inc. Stock Skyrocketed Today

By Steve Symington - Jun 19, 2015 at 12:46PM

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Is AirMedia's pop meaningful? Or just another movement?

What: Shares of AirMedia Group  ( AMCN ) were up 43% as of 12:30 p.m. Friday after the company announced it has received a non-binding "going private" offer.

So what: AirMedia CEO Herman Man Guo and the company's management are proposing to acquire all outstanding shares they don't already own for $6.00 per American depositary share. This group of buyers already owns roughly 38% of AirMedia's issued and outstanding shares.

Now what: For perspective, that represents a premium of 70.5% over yesterday's close. At the same time, however, shares of AirMedia currently trade more than 50% below the stock's 52-week-high set just last month. Keeping in mind this is one of several similar "going private" offers from CEOs of listed Chinese companies in recent weeks, this morning's 40%+ pop, putting shares around $5, understandably reflects the market's doubts the deal will come to fruition. As a result, I think AirMedia investors would be wise to consider taking at least some of today's quick gains off the table.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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