The travails of “BBGI,” Beasley Broadcast Group‘s publicly traded shares on Nasdaq, have been well documented since it started a prolonged decline in value some 11 months ago.
With shares slightly down from a $12.10 close on June 11, 2018, Beasley entered the week of July 10 wondering if shares were heading back toward $11 or slipping toward $10.50.
Now, with Beasley set to go ex-dividend in a matter of days, investors may be asking if the stock can recover to $3.50 anytime soon.
With some 58,427 shares traded on average volume of 41,629, BBGI was off 4.1% to $3.05 at the Closing Bell.
This marks the lowest value for Beasley shares not only year-to-date, but in exactly 10 years.
Indeed, it is the lowest price seen for Beasley stock since a $3.15 finish in December 2011 and mirrors prices last seen on a consistent basis in summer 2009, when the company’s share price bottomed out while America found itself mired in the Great Recession’s deepest ebb.
The catalyst for Beasley’s Wall Street woes is the July 2018 decision by the Bordes family to sell 3,126,147 shares of their Class A Beasley common stock at $7.50 per share.
That price was far lower than where Beasley shares sat on Friday, July 20, 2018. As such, investors revolted.
A recovery has yet to be seen.
During Beasley’s Q2 2018 earnings call, Beasley CEO Caroline Beasley spoke publicly for the first time on the slide in BBGI’s value. “While we are not happy with share price action related to the share, we expect long-term share liquidity,” she said, noting that a roadshow with investors focused on the company’s growth and strategic plan will likely lead to a rebound in its stock price. “Nothing has changed in our strategic objective for our company,” she said.
But, why did the Bordes family sell their shares at that time, and not today or at a future date? This has not yet been publicly addressed. Asked this question on July 24, 2018, a Beasley spokesperson would only note that the sale of the Bordes family shares enabled Beasley to get more liquidity in the market.
Did that prove to be true?
In a deal yet to be filed with the FCC but announced Monday afternoon (6/10), WDMK-FM 102.7 and the three translators in Detroit airing “Praise” are being sold to Beasley by Urban One for $13.5 million in cash.
Excluding one-time transaction costs, the acquisition of WDMK-FM is expected to be immediately accretive to Beasley’s free cash flow without materially altering the company’s leverage, Beasley said in a statement. Further, Beasley intends to fund the acquisition through borrowings under its credit facility and cash generated from operations.
Additionally, Beasley said its acquisition of WDMK-FM is complementary to the company’s current three-station cluster, comprised of Rock WRIF-FM, Classic Rock WCSX-FM and “105.1 The Bounce,” classic hip-hop WMGC-FM.
However, one market observer says more liquidity has meant more shares traded for Beasley.
“With more shares not locked up by insiders, in theory, there are more shares in the open market …. so the average daily volume could go up,” the market observer notes. “Of course, that didn’t happen.”
The announcement came as Beasley stock hit $3.43 with Monday’s Opening Bell on Wall Street. Then, just two hours later, the gains were all but fleeting, with trading seen Wednesday (6/12) as low as $3.07 in midday hours.
Trading since May 21 has particularly been harsh for Beasley, as shares finished that day’s session at $3.97 on the hopes that it could push beyond the $4 mark.
Alas, BBGI has now plunged to below where shares were on Christmas Eve 2018 — a difficult day for many media companies.
Many have recovered and some have seen their shares recede, but perhaps no company has witnessed a share decline to the likes of Beasley.
BBGI goes ex-dividend on June 27. It has a 1-year target estimate of $5.50. Wall Street consensus estimates say it is “undervalued.”
As such, could this be the bottom for Beasley? A 5 cent per share dividend is coming July 5 to shareholders of record on June 28.
Whether that triggers a rebound will be the one question the industry will undoubtedly be wondering over the next two weeks.