MultiChoice massacre

MultiChoice hit an all-time low following a poor trading statement highlighting its severe financial challenges.

On Thursday, MultiChoice released an interim trading statement for the six months ended 30 September 2023.

It told the story of a company facing severe financial challenges without a clear way to turn the situation around.

It announced that the loss per share for the period would be between R2.48 and R2.52 lower than the prior period´s reported loss per share of R0.60.

The headline loss per share for the period is expected to be between R2.29 and R2.33 lower than the prior period´s reported headline loss per share of R0.58.

The pay-TV operator provided many figures like ‘core headline earnings per share’ and even approved the addition of a new ‘adjusted core headline earnings per share’ metric.

However, none of these figures could hide the fact that MultiChoice was struggling and its results were deteriorating rapidly.

MultiChoice blamed the poor results on foreign currency movements during the reporting period, some of which are unrealised.

“The expected increase in losses and headline losses per share is primarily due to a sharp depreciation in local currencies against the US dollar,” it said.

MultiChoice added that losses were further impacted by the increased investment in Showmax ahead of its relaunch in the second half of next year.

Investors did not like what they saw. The trading statement sent the MultiChoice share price to an all-time low of R67.50 at the end of trading on Thursday.

It is trading well below JPMorgan’s price target of R80 per share when the bank downgraded MultiChoice in July.

All eyes will be on MultiChoice’s full interim trading statement when it is released next week to see the extent of its problems.

Prominent issues to watch will include DStv subscriptions and revenue growth, ShowMax’s expenditure and growth, and Kingmakers’ progress.

The chart below shows MultiChoice’s share price in 2023 year-to-date.