What Happened?
Shares of global media and entertainment company iHeartMedia (NASDAQ:IHRT) jumped 29.4% in the morning session after the company reported strong second-quarter results. It was encouraging to see iHeartMedia beat analysts’ revenue expectations this quarter. In addition, its EBITDA outperformed Wall Street’s estimates. On the other hand, its EPS missed and its EBITDA guidance for next quarter fell short of Wall Street’s estimates. Management pointed to strong performance in the Digital Audio Group, particularly in podcasting, which saw continued growth in both consumer and advertiser demand. Overall, this was a decent quarter.
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What Is The Market Telling Us
iHeartMedia’s shares are extremely volatile and have had 74 moves greater than 5% over the last year. But moves this big are rare even for iHeartMedia and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 14 days ago when the stock dropped 3% on the news that the latest U.S. consumer confidence report revealed underlying weakness despite a headline increase, raising concerns about future spending. While the Conference Board's headline Consumer Confidence Index rose to 97.2 in July, the details painted a more cautious picture for investors. The Present Situation Index, a measure of consumers' assessment of current business and labor market conditions, actually fell. More telling for the sector, the report showed a decline in buying intentions for major discretionary items such as homes, cars, and most appliances. This combination of factors signals potential weakness in future consumer spending, casting a shadow over companies that rely on non-essential purchases.
iHeartMedia is down 0.5% since the beginning of the year, and at $2.01 per share, it is trading 23% below its 52-week high of $2.61 from December 2024. Investors who bought $1,000 worth of iHeartMedia’s shares 5 years ago would now be looking at an investment worth $212.92.
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