After a painful end to the trading week on Friday, the struggles on Wall Street continued Monday for both Pandora and Cumulus Media.
At Friday’s Closing Bell, Cumulus’s stock sat at 31 cents — reflecting a 16.2% tumble after an early-morning dip that saw the No. 2 radio broadcasting company by number of radio stations suffer a stock drop to just over 25 cents.
Today, Cumulus shares tumbled again — sliding 6.5% as of 12:25pm Eastern, to 29 cents a share. That’s exactly where it finished the day, or at $0.2894, to be precise.
On Friday, heavy volume of 2.26 million shares were traded. Today, the trading picked up in the afternoon hours, at 1.11 million shares traded; the average volume for CMLS shares is 643,553.
Alarmingly, the company’s market cap stands at just $8.48 million.
The steep drop in Cumulus’ stock price comes after the company prepares to release its official Q3 results on Thursday (11/9) amid major questions surrounding its fiscal health.
On Wednesday (11/1) Cumulus revealed in a Securities & Exchange Commission filing that a scheduled interest payment of roughly $23.6 million on its 7.75% Senior Notes due 2019 — planned for payment on Nov. 1 — wasn’t paid.
The decision to forego the scheduled interest payment came from the Cumulus Board of Directors’ Restructuring Committee on Monday (10/30).
It’s not a default, however: There is a 30-day grace period worked into the loan agreement, codified in May 2011. Thus, nonpayment constitutes a default if payment is not made on Dec. 1.
The company says the nonpayment was made in support of its efforts “to develop and implement a restructuring” that will allow Cumulus to continue its operational and financial momentum, “as evidenced” by the release of selected preliminary Q3 results on Oct. 26.
Cumulus says the decision to withhold payment during the grace period will not impact its operating constituents, including Cumulus’ employees, advertisers, network affiliates, vendors and content partners.
The SEC filing comes after Cumulus on Oct. 20 appointed D.J. “Jan” Baker to its Board of Directors. Baker retired as a partner from Latham & Watkins LLP in July, most recently serving as the law firm’s Global Co-Chair of the Corporate Restructuring Practice Group.
PROBLEMS AT PANDORA
Friday’s biggest news from Wall Street concerned Pandora, which experienced an unprecedented 24.8% drop in its share price to $5.57 as investors scrambled to sell shares ahead of a bruising Q3 for the streaming audio company.
In after-hours trading Friday afternoon, a small recovery started, bringing it up to $5.60 at 4:13pm Eastern.
Then came Monday’s Opening Bell, which saw Pandora immediately dip into the red. As of 12:28pm Eastern, “P” was off another 4.7%, to $5.33.
At the Closing Bell, Pandora closed down 5.6% to $5.28, and it was down another penny in immediate after-hours trading on Wall Street.
Volume was again exceptionally high, at 32.2 million shares; normal trading volume for Pandora is 6.66 million shares.
The fresh dips came following a Barron’s report suggesting that Pandora Media, “unfortunately, has hit a wall with ad trends, and we don’t see a quick fix. This might be funded with cost cuts, or not, suggesting risk to next year that costs step up as ad revenue flattens.”
SCRIPPS SINKS, GREY DAY FOR GRAY
Other big dips in midday trading include a stupendous 9.4% drop for The E.W. Scripps Co., to $14.16, as investors responded to what generally considered a disappointing Q3 earnings report for the owner of radio and TV stations.
Additionally, Gray Television shares recovered sharply after being down as much as 7.7%. Despite a strong Q3, GTN shares were off 3.9%, to $14.75.
What looked like a $2 fall for Sinclair Broadcast Group, to $29.40, in midday trading turned into a 1% gain, to $30.30, at the Closing Bell.
Lastly, investors rejoiced over a positive Nexstar Media Group Q3 report, propelling NXST shares upward by 3.6% to $65.30.