With new companies rolling out from tech and leisure powerhouses in late 2019, 2020 was anticipated to be an enormous 12 months for video streaming. Then, the coronavirus pandemic made streaming video even greater. With the massive names in play, few would have paid any consideration to tiny Cinedigm (NASDAQ:CIDM) inventory.
That modified on June 4, 2020, when CIDM rocketed to a single-day 177% achieve. Since then, Cinedigm has been within the information consistently. It’s a content material streaming firm, a Reddit inventory, and most not too long ago it has been lumped in as a possible NFT inventory.
There’s a lot to unpack with this firm. Let’s begin with the truth that Cinedigm earns a ‘B’ score in Portfolio Grader. So we’re not speaking an organization that’s circling the drain, like so most of the shares which have seen their valuation blown fully out of line by retail buyers.
An funding in CIDM inventory is just not pure playing, as with many Reddit stocks. The query is — taking the Reddit impact out of the equation — is CIDM positioned for long-term development?
The Reddit Impact
On June 4, 2020, Cinedigm announced an agreement that may see its content material accessible on some 300 million good TVs. Channels comparable to “The Bob Ross Channel” and “Comedy Dynamics” could be accessible to homeowners of most of the main TV manufacturers. That’s an enormous deal for a corporation whose paid subscriber base numbered within the low a whole bunch of hundreds.
You’ll count on CIDM inventory to pop on that information, but it surely exploded. CIDM began the day’s session at $1.31, and closed at $3.63 for a 177% achieve.
The dramatic achieve got here partially as a result of retailer buyers on Reddit’s r/WallStreetBets board had been driving it up. The speedy features instantly started to trip warnings that one thing was afoot.
Cinedigm Is Now an NFT Inventory … Type Of
Including to the confusion over what precisely is occurring with Cinedigm shares is the corporate being lumped in with NFT shares.
NFTs (non-fungible tokens) are distinctive digital objects, and they’re being pushed as the brand new collectible. NFTs are a latest improvement that shortly hit wildfire standing. In March, a single JPEG file (a digital picture) offered at public sale for $69.3 million. Compared, one of the highest prices ever paid for an Impressionist painting was $110.7 million for Claude Monet’s 1890 portray “Meules” in 2019. That’s for an precise portray — not a digital file — and from one of many world’s most celebrated painters.
The angle on Cinedigm is that the corporate owns or is concerned with content material that may very well be mined to create NFTs. Even when Cinedigm isn’t immediately concerned, the idea is that it might probably get some kind of reduce of the proceeds from promoting NFTs. It’s a stretch, however the mere suggestion of NFTs was sufficient to pump up the quantity of CIDM inventory trades in late March whereas inflicting one more spike within the value of shares.
Backside Line on CIDM Inventory
For the previous 5 years, CIDM inventory has sometimes traded in a band between $1 and $2 per share. It was in 2020 when the sample was disrupted. The inventory market crash dropped CIDM to 32 cents after which a number of months later it surged to that $3.63 shut. That was adopted by a protracted decline, together with a number of months again in penny inventory standing. To date in 2021, it has been again to buying and selling throughout the $1 to $2 band.
At its present value of $1.33, CIDM inventory has important upside, even inside that conventional buying and selling band. The danger is the volatility launched by Reddit and now the NFT craze makes it tough to foretell the place shares are going.
When it comes to its enterprise, Cinedigm appears to be heading in the right direction. The corporate has been signing deals that make its content material accessible to streamers on main platforms. In its latest quarter, the corporate famous that between acquisitions and natural development, subscribers had been up 216% year-over-year. Whereas total income was down because of Covid-19’s affect on its legacy theater enterprise and DVD distribution, streaming channel income was up 85% YoY. Advert income was up 150%. Streaming content material licensing was up 34%. The corporate additionally reduce its debt by 51%.
In different phrases, there are not any evident crimson flags, and loads of indicators that Cinedigm’s enterprise is wholesome. However buyers have to be ready for what may very well be a curler coaster journey.
On the date of publication, neither Louis Navellier nor the InvestorPlace Analysis Employees member primarily liable for this text held (both immediately or not directly) any positions within the securities talked about on this article.
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