Cumulus Stock Termed A Must-Sell

Cumulus Media Inc. (CMLS) was one of the Russell 2000's biggest losers for Thursday as the stock slid 15.54% to $0.76.

Starting at an opening price of $0.87 a share, the stock traded between $0.76 and $0.90 over the course of the trading day. Volume was 9.27 million shares over 5,181 trades, against an average daily volume of n/a shares and a total float of 233.77 million.

The losses send Cumulus Media Inc. down to a market cap of $177.69 million. In the last year, Cumulus Media Inc. has traded between $4.51 and $0.90.

The Russell 2000 is one of the leading indices tracking small-cap companies in the United States. It's maintained by Russell Investments, an industry leader in creating and maintaining indices, and consists of the smallest 2000 stocks from the broader Russell 3000 index.

The 'Sell' advisory comes from Seeking Alpha, a content service for financial markets and investors.

According to Seeking Alpha, Cumulus is the fastest-growing radio company in the United States, serving 90 metro markets with over 460 stations. But their view is that being the fastest-growing radio station today is analogous to being the fastest-growing buggy whip manufacturer in 1920. They believe that radio advertising is on the decline.

Jeff Marcus

Seeking Alpha cites several reasons for its "sell" advisory. First, a number of very talented money managers have abandoned the name, and they're nervous about betting against such people. Second, there are problems with its capital structure. Third, there are poor earnings here in spite of growing revenue. Fourth, the shares are priced very optimistically in spite of the aforementioned problems.

In order to finance the various acquisitions Cumulus has made, it has taken on a massive amount of debt. According to Seeking Alpha, the company's debt-to-equity ratio is stunningly high.

Other analysts have questions about Cumulus management. Who's in charge?  Jeff Marcus, currently non-executive Chairman of the Board has been rumored to be making the rounds at many Cumulus stations and unconfirmed reports have EVP of Content and Programming John Dickey cleaning out his office Thursday night. A year ago he stepped away from a Co-COO/EVP operating role shared with Jon Pinch to take the EVP of content position. He’s been a prime mover in Cumulus Media’s country NASH initiative – one of the things his brother Lew has been touting as a growth engine for Cumulus.