FriendFinder Networks Inc. (NASDAQ: FFN) has managed to be one of the worst IPOs of 2011. The performance was bad enough that you might think it was a Chinese reverse merger…. Far from it. The company reported earnings this week and now it is trying to use the media to get its story out there. We have been very critical of the company and its business model. Still, gains are gains and money is money. If the reaction seen in the stock so far is any indicator, its use of the media may be working.
Just yesterday came news that it saw a 33% gain in its adjusted EBITDA to $27.2 million in its first quarter of fiscal 2011 and as its first earnings report as a public company. The company noted that operating income was up 52% to $19.7 million and its adjusted cash flow rose 60% to $14.3 million. More importantly, its net loss fell to -$0.27 EPS from -$0.60 EPS a year earlier.
The company’s CEO was just on CNBC and his video presentation talked about growing faster and being larger than most social media including Facebook. Before banking too much on this, the company said that revenue for the first quarter of 2011 was $83.52 million and there was no comparison to its prior year on that front in its press release. That is a concern and a flag for us under overly selective disclosure so we went into its quarterly SEC filing and saw why they did not include the data…. Net revenue in the first quarter of 2010 was $86.205 million. It turns out that the shrinkage was in both service and in product revenues.
The company also noted that it was currently considering several acquisition candidates in its press release, but when asked if it was for sale when it was on CNBC the only real answer given was that anything is for sale at the right price.
Shares hit a post-IPO low of $4.80 this morning but since the CEO was on CNBC touting the ‘Growth’ the shares are up about 17% at $5.82 on more than 1.4 million shares. The market has barely been open for an hour and today is already the most active trading day since its IPO when 2.7 million shares traded hands.
Before you get too excited, keep in mind that the IPO price of $10.00 lasted for all of about three seconds.
JON C. OGG
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