Stocks

CIDM Stock: Is Cinedigm worth looking at?

Shares of Cinedigm (CIDM) continues to bleed out after reporting good earnings and it seems that investor sentiment is dwindling. However, CIDM stock is a very long term hold.

Cinedigm is going in the right direction with its announced acquisition of popular horror streaming service Screambox, many are calling this the “Netflix of horror streaming” says the Tech Times and was named one of the best PC streaming services in 2021 by PC Mag. It currently features any type of horror imaginable like Supernatural, Slashers, Classics, Zombies, Extreme, Psychological, Cult, Underground, and more.

With this aqcuisition, Cinedigm plans to globally expand Screambox titles to its distribution partners who includes Roku, Comcast, SlingTV, Dish Network and much more. The company anticipates the service could reach seven figure subscriber levels within the first 36 months after the acquisition is completed, with a focus on rapid global expansion and distribution.

What the quarterly update says about CIDM stock

Headlining the quarterly update, however, was news of the company’s transition toward online streaming, with a focus on niche content, like its Bob Ross inspired “channel” or one dedicated to horror content called Screambox. This is a fast-growing business, with streaming revenue up 85% year over year. However, the total subscriber base is just 245,000, up more than 200% over the past 12 months thanks to acquisitions and internal growth. 

One other highlight from the quarter that’s worth noting is that Cinedigm’s debt was cut in half year over year, partly the result of a conversion of a convertible note into stock. It also sold stock to raise additional cash. Which brings up a fairly important figure — the average share count, found on the company’s statement of operations, increased by more than 200% year over year. That massive increase actually hid the company’s quarterly loss to some degree, with the absolute value of its net loss increasing to $9.7 million from the prior year’s roughly $2.3 million, an over 300% jump. (A larger absolute loss spread over more shares results in a smaller per share loss.) While it is easy to argue that Cinedigm’s makeover is a work in progress, it’s not hard to understand why investors might be displeased with the progress at this point.