Shares of iHeartMedia dropped nearly 17% after the broadcast-radio company warned of a projected decline in revenue for the current quarter, with hopes of a recovery later in the year.
During midday trading, the stock plummeted 17% to $3.74. Year-to-date, the stock is down 39%, whereas the S&P 500 index gained 16% within the same period.
Q3 Sales Expectations
iHeartMedia anticipates a mid-single digit percentage decline in third-quarter sales. However, when excluding the boost from last year’s political advertising sales, the decline is estimated to be in the low-single digit percentage range. Analysts surveyed by FactSet projected third-quarter sales of approximately $953.9 million, reflecting a 3.5% decrease from the previous year.
During a conference call with analysts, Chief Financial Officer Rich Bressler revealed that revenue experienced a 5% drop last month compared to the same period last year. However, he expressed optimism about generating a significant amount of free cash flow in the final quarter of the year. Bressler also highlighted the adverse impact of rising interest rates on the company, as approximately 40% of iHeartMedia’s debt is subject to floating rates.
In the second quarter, iHeartMedia reported sales of $920 million, surpassing analysts’ expectations of $906.1 million in sales. Furthermore, the company’s quarterly loss per share of 16 cents was narrower than analysts’ predicted loss of 19 cents per share.