Why has Audioboom Group PLC (AIM: BOOM), a podcast distribution platform, been consistently underperforming in the AIM market?
The share price of this London-based company has seen a drastic drop of over 90% from its peak in April of the previous year. This decline was further exacerbated by a disappointing trading update this Friday, which resulted in the stock plunging by over 25% in a single day.
Despite achieving a new milestone of 135 million global monthly downloads in May, Audioboom has been compelled to revise its revenue and adjusted EBITDA projections for the current fiscal year.
According to the update, the company has modified its strategy for calculating its minimum guarantee offers for podcast partners. In simpler terms, Audioboom will begin to pay podcasters less.
This discrepancy between the increasing number of listeners and the lack of profitability highlights the primary issue in the podcast industry: the difficulty in monetizing the platform, with only a select few managing to do so successfully (Joe Rogan’s $200 million deal with Spotify being a notable exception).
Moreover, the UK has not embraced podcasts to the same extent as the US or Asia. As of 2020, only 12.5% of Brits listen to podcasts weekly, compared to 22% in the US and a staggering 58% in South Korea.
Audioboom’s main issue seems to be a lack of advertising revenue. The company claims to be well-positioned to capitalize when the advertising markets rebound. However, for the time being, shareholders are faced with a rather pessimistic share price.
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