It’s been a rough morning of trade for Out of Home media company Ooh!Media Limited [ASX:OML], who have seen $1.54 slashed off their share price before midday today.
The huge fall came off the back of the company’s trading update, which they released to the ASX this morning.
According to the update, oOh!Media have flagged a $27 million decrease in their FY19 earnings guidance, due to ‘significant decline in overall media advertising’ in the second half of the year.
The small-cap’s shares are currently trading 29.2% lower at time of writing, sitting at $2.86.
Intense volatility like this is typical for any small-cap stock, which tends to deter investors from seeking them out.
But in terms of average returns, small-caps often manage to smash their large cap competition.
It’s all about finding the ones who will experience this volatility in the right direction.
Too close to results release for market to forgive
Today’s update revealed that oOh!Media expects an underlying FY19 EBITDA of between $125 million and $135 million.
This is a revised figure from the previously forecast $152–$162 million range.
The company claims that earnings tend to be weighted towards the latter half of the financial year, adding that ‘challenging market conditions’ led to a greater than expected decline in bookings in the third quarter.
As such, while ‘the fourth quarter [is] indicating improvement on the third quarter, trading in recent weeks indicate that this improvement will be less than anticipated and will now be insufficient to offset the significant decline’.
Clearly, investors aren’t buying the ‘sudden discovery’ story, considering the company’s results are set to be released on 26 August.
oOh!Media Insist that ‘the current general economic uncertainty…makes predicting activity more difficult’.
But just 10 days’ notice isn’t sitting well with the market.
You’d think, after such a debilitating third quarter, the company would have known sooner whether their profit could be salvaged.
Alas, the market appears to be out for the kill.
What this means for oOh!Media
Today’s announcement has shaken investor trust in the company, which is hard to redeem.
Perhaps their results update can show a glimmer of hope or innovation that could reel shareholder interest back in.
But I’d say, for now, oOh!Media have a lot of work to do.
For Money Morning