Chicken Soup for the Soul Entertainment, benefiting from its stock’s all-time highs, plans to raise $ 75 million from a sale of its stock.
The streaming-focused company announced this morning that it will sell 1.875 million shares at $ 40 each, with the offering expected to close on July 7th. It had previously teased the offering plan with no specific numbers.
Chicken Soup’s shares more than tripled to an all-time high in the past year, the most dramatic increase since the company’s IPO in August 2017. In recent months, Crackle has taken full control in a two-step deal with Sony. and also acquired the assets of longtime film and television producer Sonar Entertainment.
Proceeds from the share sale will be used later this year to launch a chicken soup for the Soul branded streaming service. The new AVOD platform will complement the company’s existing ones, including most notably Crackle and Popcornflix.
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Investors, as is typical when a company sells stocks and dilutes existing owners of a stock, have been cool to the news. Chicken Soup’s stock fell 4% in early trading to $ 40.01.
Eric Wold, media analyst at B. Riley Securities, praised the offer in a customer announcement. “We see this as a positive strategic move to position the company for additional content, both to make the various AVOD services more attractive to viewers and to increase gross margins,” he wrote. The company “is well positioned to benefit from attractive underlying trends in AVOD service demand and a shift in advertising money.”
The analyst reiterated his “buy” rating on the stock along with a 12-month price target of $ 62.
The upcoming AVOD service will be highly appealing to women viewers and families, added Wold, and will result in a “significant increase” in ad inventory.
While chicken soup is small compared to AVOD rivals like Hulu, Peacock, and HBO Max, it’s growing significantly. For the first quarter, the company had revenue of $ 23.2 million, a 75% year-over-year profit that was advertising-driven.