- Zoo Digital shares have lost nearly 80% year-to-date
- Orders ‘back to normal’ by October 2023
- Net cash no less than $16 million as of 30 September
Shares in Zoo Digital (ZOO:AIM) fell nearly 27% to 38p in morning trading as the cloud-based localisation and media services company said the writers’ strike in Hollywood was still going to have ‘significant short-term impact for Zoo’s full year 2024 outcome.’
Zoo Digital shares have lost nearly 80% year-to-date.
Russ Mould, investment director at AJ Bell commented: ‘Zoo Digital, which supplies subtitles and dubbing services, saw its share price slump by a third after saying earnings visibility was still limited.
‘It had been banking on order levels getting back to normal from October but says that now looks unlikely.
‘Hollywood studios will be itching to get back to work and churn out that prized content, so it might simply be a short-term rocky period for Zoo Digital. Indeed, the fact it will continue to invest in dubbing capabilities in hope of a rapid rebound in work shows the board is thinking about the long-term prize, not panicking because of short-term problems.’
Gillian Wilmot, chairman at Zoo Digital said: ‘Whilst orders are being processed monthly, they have been and continue to be at historically low levels such that first half revenues are expected to be approximately $21 million, leading to a significant EBITDA (earnings before interest taxation depreciation and amortisation) loss for the first half of the current financial year to 31 March 2024.
‘However, the company is in a strong financial position with net cash as of 30 September 2023 expected to be no less than $16 million.
Hollywood strikes take aim at tech sparking Zoo Digital share price collapse
Zoo Digital is not the only company which has been affected by the Hollywood writers’ strike which has now come to an end after five months – one of the longest strikes affecting Hollywood in decades.
Other companies affected by the Hollywood writers’ strike include Disney (DIS:NYSE) and Warner Bros Discovery (WBD:NASDAQ) and Netflix (NFLX:NASDAQ).
The Writers Guild of America (WGA) said in a statement that union leaders ‘voted unanimously to lift the restraining order and end the strike.’
Its 11,500 members will then vote on whether to approve a three-year deal that offers pay raises and protections around use of AI (artificial intelligence), according to the BBC website.
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (Martin Gamble) own shares in AJ Bell.
