23rd Jun 2023 12:07
(Alliance News) - Audioboom Group PLC needs to prove that it can be profitable if it wants to avoid a "tough ride" on the stock market, AJ Bell said on Friday.
"When you have a hot theme investors look for ways to play it and Audioboom couldn’t have had a better name. Its share price shot up from circa GBP1.50 to more than GBP22 in just two years, helped by chatter that Amazon wanted to buy the business," AJ Bell analyst Danni Hewson commented.
"Hype has since turned to reality with the share price crashing back down as a key source of earnings has disappointed and investors question the edge Audioboom has on other podcast platforms. The advertising market continues to be weak as corporates watch their pennies for fear of an economic downturn, which means Audioboom once again cannot hit earnings forecasts."
Shares in the London-based podcast provider fell 25% to 212.00 pence each in London on Friday afternoon.
Audioboom said it expects to report lower yearly revenue and profit than expected as advertising markets prove "challenging".
The company said the advertising markets have remained challenging "for longer than anticipated", meaning that it expects to report lower revenue and adjusted earnings before interest, tax, depreciation, and amortisation than previously forecast.
However, the firm added that it expects that markets will improve, and is "in prime position to take advantage when they do".
"In strong economic conditions, Audioboom should in theory thrive thanks to greater advertising income, but it needs to show that its business can be profitable in more uncertain times. Until there is proof, it could be a tough ride for the company on the stock market," Hewson said.
FinnCap's Michael Hill noted the silver linings in Audioboom's release, however, commenting: "As management gains further clarity on the outlook for FY23, we place our forecasts under review at this point and expect to re-establish forecasts at the H1 results in mid-July. As demonstrated by the record operating metrics, the platform remains excellently positioned to capitalise when the advertising market improves".
The firm said it continues to see "good" like-for-like revenue and growth in operation key performance indicators, with this performance expected to be maintained through to the second half of the year.
Meanwhile, the firm also said it has launched new partnerships with "top tier podcasters".
By Harvey Dorset, Alliance News reporter
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