Emerging from bankruptcy, iHeartMedia returned to Wall Street yesterday morning.
Unfortunately, the nation’s largest radio broadcaster wasn’t exactly welcomed with open arms.
Now trading under “IHRT” on NASDAQ, investors swiftly punished the stock shortly after embattled top executives Bob Pittman and Rich Bressler rang the Opening Bell.
Choosing a direct listing, the broadcaster’s top executives had aimed for a Spotify-like success. The company didn’t find it.
Previously traded under “IHTM,” iHeartMedia’s stock soon fell 7.4% from its opening price of $17.
Spinning the company’s recent emergence from bankruptcy in May, Pittman explained iHeartMedia had previously spent too much money on interest payments.
“We’ve had a very good operating business, but our capital structure was not in good shape.”
Shares fell as low as $15.75. Prior to the market’s close, however, the company rebounded, closing at $16.50 per share, down 3%.
Underscoring investors’ skepticism of iHeartMedia stock, Justin Patterson, analyst of investment bank Raymond James, asked,
“I think the question to be asking there is really the same question we ask of say, a Netflix versus traditional media itself: How exactly does the incumbent player, the one who is at a more mature stage, has traditionally operated through linear delivery channels, or in this case terrestrial radio, how does that pivot in an increasingly digital world?“
Revealing why Wall Street readily supported Spotify and Slack, but remained on the fence about iHeartMedia, Evercore ISI’s Kevin Rippey explained,
“You have obviously a lot of investor excitement over [Spotify and Slack] given the growth profile and … potential disruption. iHeart and the broader portfolio of terrestrial radio stations that it controls are a very well understood business and have been around for a long time.”
Prior to its direct listing on NASDAQ, the broadcaster also revealed disheartening numbers. Last year, iHeartMedia generated $3.6 billion in revenue – flat compared to the previous year. The company also posted a net loss of $38 million on a pro-forma basis.
Featured image by Petteri Sulonen (CC by 2.0).