Music promoter SFX Entertainment is leaning towards bankruptcy after a poor third quarter showed low numbers and stock performances. The company, which is based in New York, lost 45.64 percent during the past week and dropped 56.41 percent in the last four week. Results show that it was trading at about 54 cents a share – which doesn’t sound good at all. Former shareholder Steven Azarbad, who is Co-Founder of Manhattan investment firm Maglan Capital, said that a bankruptcy would “not be a surprise”.
SFX, which is a producer of live events and entertainment primarily focused on electronic dance music, has been put up for sale. However, Azarbad and other investors have grown wary as to whether CEO Bob Sillerman can take the company private or sell the assets he’s gained at cost.
“The numbers they reported last week were awful” – Steven Azarbad
The third quarter results were significantly less than Wall Street estimates according to analyst Rich Tullo from Albert Fried & Co. Tullo explained that the company only generated $113 million out of the expect $190 million.
This year’s third quarter revenue also differs with third quarter revenues from 2014, which weren’t that great but at least reached around $143 million.
“The company’s $300 million plus debt is unsustainable” – Rich Tullo
The auction process could be stalled for SFX as they could run into some contractual issues within some of its properties. One such issue lies in it’s live streaming. Live streaming rights that were exclusive to Beatport, which is an SFX property, are now shared with Spotify.
In a recent interview, Bob Sillerman told the New York Business Journal that he’s confident that the assets will sell and at cost. Likely buyers are said to be Live Nation and Anschutz Entertainment Group.
Though a source in the music industry states that SFX is having good ticket sales, it is still viewed as negative and bankruptcy is not out of the cards.