SFX Entertainment's stock has tumbled once more after reporting its Q2 earnings to investors. Despite having strong revenue growth, primarily from the busy summer festival season, the company reported weak earnings and a net loss of $48 million. SFX stock took a spill on Monday (Aug. 10), falling 22 percent to an all-time low of $2.36 before the second quarter earnings were released after the end of day trading.
It picked up slightly during after-hours trading, but has fallen back down today (Aug. 11) to $2.34).
There was some reason for optimism in the Q2 report. Revenue grew 48.3 percent to $121.1 million from 29 festivals and 238 other events from the various promoters that the company owns. $106.7 million of that revenue (88.1 percent of the total) comes from live events and festivals that operate under the umbrella of SFX. The remaining 14.4 million (11.9 percent of total revenue) came from various marketing services, digital music sales from the likes Beatport and other digital activities.
SFX events attracted over 1,380,000 attendees during Q2. Festival attendance rose by 37.7 percent to 1.1 million. The 13 festivals in the previous second quarter only experienced growth of 3.4 percent. SFX owns festivals globally including Tomorrowland, Electric Zoo, Mysteryland and TomorrowWorld.
Even with an increase in revenue, costs rose an additional 61 percent against the 48.3 percent growth in revenue. Losses for the quarter grew 36.2 percent to $48 million as net loss for the six month period ending on June 30 is now tallied at 89.6 million.
Q3 will include more festivals from July through September that SFX hopes will buoy their revenue and offset some of the increased costs it is facing.
The stock price is especially worrisome for SFX Chairman and CEO Robert F.X. Sillerman who is attempting an aggressive share buyback plan that would take the company private. He has floated a price of $5.25 for the shares and the current valuation shows that investors do not trust him to get that price. A competing offer was not made, though the company did reveal that it did receive "several indications of interest" regarding "various components" of its business.
