Loop Media Inc.’s stock price has increased over the last two months, even after it fell for a bit in mid-December due to poor fourth-quarter financial results.
A price drop of 38% from the closing price of $1.29 on Dec. 12, the day the Burbank short form video distributor reported its earnings after the market closed, to 80 cents the following day, was short lived.
The company’s stock went back up by 5% to 84 cents on Dec. 19, the day after Loop announced it had obtained additional cash availability of approximately $4 million. It has continued to go up since then.
Still, the stock price lost more than 80% from about a year ago.
The share price closed at $1.10 on Dec. 28.
On Dec. 12, the company reported a net loss of $9 million (-15 cents a share) for the quarter ending Sept. 30, compared to a net loss of $14.6 million, (-28 cents) in the same period of the previous year. Revenue decreased by 53% from the fourth quarter of the prior year to $5.7 million.
Loop attributed to the drop in revenue to a material slowdown in digital advertising spend due to the macroeconomic environment.
Losses in 2023
In fiscal 2023, Loop reported a net loss of $32 million (-49 cents a share), compared to a loss of $29.5 million (-61 cents) in the previous fiscal year. Revenue was $31.6 million, compared to $30.8 million in fiscal 2022, or an increase of 2.6%
Loop attributed the increase to the growth of demand partners, direct sales deals, partnerships and software improvement and efficiencies.
Jon Niermann, the chief executive of the company, said in a conference call with analysts on Dec. 12 that he believed that Loop is stronger coming out of the just completed fiscal year and looks to capitalize on what he believed to be an improved growth potential ahead of it.
“We see a better path ahead and recovery as we progress through Q1 in our new fiscal year and believe that FY ’23 represented a low point in our ad demand challenges,” Niermann said. “In fact, it appears that revenue growth has normalized as we are currently already tracking well ahead of the previous three quarters in terms of top line revenue and reduced overall (selling, general and administrative) expenses.”
Eric Wold, an analyst with B. Riley Securities, a subsidiary of B. Riley Financial Inc. in West Los Angeles, said in a research note from Dec. 19 that he was reiterating the buy rating on Loop’s stock but downgrading the price target from $5 to $2.50.
“Although we acknowledge recent operating results and the subsequent impact on the stock price have been disappointing since our midyear initiation, we believe management has taken the right steps to improve the cost structure ahead of a year that could benefit from numerous advertising tailwinds to drive improving results on the path toward positive AEBITDA (adjusted earnings before interest, taxes, depreciation and amortization),” Wold added in the note.
He also noted that the total screen penetration exceeded his projections.
In the fourth quarter, Loop added 2,117 quarterly active units – or the number of installed devices Loop has in the field – bringing its total on the owned and operated platform to 37,015, Wold said.
“While this came in below our assumption for an increase of 3,000 (quarterly active units) for the quarter, the company also added another 6,000 partner platform screens compared to our assumption for no additional screens – bringing the total partner platform screens to 42,000 vs. our estimate of 36,000,” Wold said. “This brought the total number of screens reached at quarter-end to 79,015 compared to our estimate of 73,898 screens.”
