Cinedigm Corp. (NASDAQ: CIDM) has always been considered a speculative stock among the movies, content and video segment. Despite some major ongoing woes in the movie theater business and in the media business as a whole around the COVID-19 pandemic and around the recession that came from it, Cinedigm may have just given the company and its shareholders a new life in a deal that includes Amazon.com Inc. (NASDAQ: AMZN) via IMDb TV. The company may have also just created some serious bad blood for investors with a capital raise.
As with all small-cap and micro-cap companies making major media announcements, the question of how it will see revenues rise is likely to come into play. Some investors and speculators may question how much of a boost Cinedigm can expect to its revenues, and a strategy of a capital raise may bring additional questions on top of a history of declining revenues. Other investors and speculators may believe that any platform expansion may be the best thing that could ever happen.
The company has been acquiring rights to many existing shows, but it announced on Wednesday that announced today that IMDb TV is now offering its free ad-supported linear channels CONtv, Dove Channel, Comedy Dynamics and Docurama. A press release from Wednesday morning confirmed that these four channels will be launched on Amazon’s IMDb TV and that they will further extend Cinedigm’s reach and distribution of its ad-supported business.
Cinedigm is a distributor and aggregator of independent movie, television, and other short form video content. The company had previously been dependent on theaters and venues, but it has been expanding. The press release also extends its commitment to bring its diverse (and eclectic) portfolio of channels to as many consumers across all major video streaming platforms.
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IMDb TV is still a free streaming video service. Cinedigm indicated that it has thousands of premium movies and TV shows and is available as an app on Fire TV and as a free channel within the Prime Video and IMDb apps across hundreds of devices.
Cinedigm shares rose exponentially on the news, but the company also took the massive rise as an opportunity to raise capital to the tune of $8 million. The company is selling 10,666,666 shares of its own common shares at $0.75 per share. The sale is via a registered direct offering priced at-the-market under Nasdaq rules, and the sale is expected to close on May 22.
This company has also seen a less than impressive pattern of revenues from operations in recent years, and it has nothing to do with the recession. In Fiscal Year 2019 (ending in March), its revenues were only $53.53 million. That was down from $67.68 million in 2018 and down from $90.39 million in 2017.
Cinedigm was once given massive analyst upside in a research call from Macquarie in recent years, but the stock has remained in the realm of micro-caps.
Cinedigm shares had risen more than 300% to as high as $2.63 on Wednesday, but the news of the offering and the steep discount based on the highs had taken the stock all the way back down to $2.09 late in the day and then down to $1.27 as of the closing bell.
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Cinedigm’s stock faced multiple trading halts based on the share price gains on Wednesday, and it had traded nearly 81 million shares even before the market’s close. This stock was just at $0.62 as of Tuesday’s previous close, and its 52-week trading range had been $0.25 to $2.03 ahead of this news.
For further history, Cinedigm had been more than $8 in its stock price about 5 years ago and its shares were exponentially higher back before the Great Recession more than a decade ago.
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