RBR-TVBR analysis
When a public company does a reverse split to prop up its stock price, the worst thing that can happen is that, rather than stabilizing, the price just heads back toward the pre-split level. That is exactly what has been happening for Spanish Broadcasting System.
It was back on July 12th that SBS did a 1-for-10 reverse split to get its stock price back above the Nasdaq minimum bid of $1.00 and avoid a delisting by the exchange. The stock had closed at $6.24 post reverse-split, compared to $0.66 the previous day, when there were 10 times as many shares.
So far, so good. The stock held for a while above the six bucks level. But Q3 was not a good quarter for stocks in general and radio stocks in particular. As reported recently, the RBR Radio Index turned negative for the year in Q3. Before the end of July SBS was back in penny stock territory, falling below the five buck line to end the month at $4.61.
The decline has accelerated in recent days. SBS ended Q3 at $1.66, down 77% for the year after adjusting for the reverse split.
The stock closed Friday (10/7) at $1.19, down nine cents for the day – and putting it within spare change of the Nasdaq minimum. Should the stock, which trades as SBSA, fall back below a buck, though, it would take many months for it to again face delisting.
To be sure, shareholders have taken notice. Attiva Capital in August called for CEO Raul Alarcon (pictured) to split SBS in two and find a deep-pockets media partner to buy a majority stake in the Mega TV business. There has been no public response from Alarcon, who has absolute control of SBS via his super-voting Class B shares. But the value of his shares has plunged this year, along with those held by Class A shareholders.
The chart below is adjusted to reflect the 1-for-10 split.
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