When a stock drops more than 80% in six months, it grabs attention. This is exactly what’s happened to Ten Network Holdings Ltd [ASX:TEN].
The stock is down 82.7% year-to-date. It represents more than $284 million lost to the company’s market cap.
Why did Ten Network Holdings Share Price Drop So Much?
Ten didn’t start 2017 on the best foot. In February, the company announced that revenues had slightly increased despite the declining advertising market. Yet Ten also stated that earnings would be slightly lower than previously expected.
Then when half yearly results were released, Ten reported a net loss for the half of $232.2 million. Shortly after, Ten shareholder, Lazard Asset Management Pacific Co. decided to sell a large bundles of share.
And this morning the Australian Financial Review wrote:
‘Network Ten’s board of directors will use the next two days to decide whether to appoint an administrator to the free-to-air broadcaster or keep pursuing refinancing options to keep the company afloat.’
‘On Tuesday, Ten confirmed revelations in The Australian Financial Review on Sunday that its billionaire shareholders, who are guarantors of a $200 million loan which expires in December, would no longer support the broadcaster as it looks for a new $250 million loan.’
What now for ASX:TEN?
It’s not always right to stay away from beaten down stocks. Many times, the market will over exaggerate negative news. This is when savvy investors can swoop in, buy the stock for cheap and wait for the business to recover.
Yet, I don’t believe Ten is on the rebound anytime soon. Or if they are, it might be too hard to predict when.
Junior Analyst, Money Morning
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