Rentrak crapped the bed after earnings Thursday dropping roughly 40% early in trading Friday. I listened to the RENT conference call as it's a very interesting long term growth story. Here's a few take-aways. (full disclosure: I went long Friday)
The CEO is a very positive guy, but he stonewalled and diverted most analysts. The reaction was probably so bad in part because management gave the impression they were hiding further bad news.
Of course the derivative of that is most analysts left the call unsatisfied. Future downgrades seem probable, but maybe not right now given the depth of the drop.
They struggled to raise prices. Their excuse was some nonsense using 2 variants of the law of large numbers as an excuse...jeez.
It sounds like competition is ramping up (and why wouldn't they be under attack, they are kicking Nielsen's ass in local stations). Also the big cable/satellite mergers have seemingly driven up data acquisition costs. They're getting squeezed on both sides!
They've signed only 20% of the available US networks. Plenty of room for further growth there.
Interestingly car and politic ads can make up, up to 50% of ad revenues for local stations. Sure makes sense when you think about it!
To summarize: The company still has strong growth prospects. However, I'm convinced based on management's behavior on the call I don't want to be long into the next earnings report.
Trade 'em well!
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