Investors who hold Insignia Systems stock in their portfolios are a lucky bunch. Shares of this in-store and digital advertising solutions provider spiked 205% on Monday. This was accompanied by a massive rise in volumes, which ballooned to 84.5 million from 22K.
However, investors soon cashed in, as reflected through a 31% drop in Insignia Systems stock on Tuesday. (See Insignia Systems price charts)
What’s Driving These Big Moves?
The surge in Insignia Systems stock followed the company’s announcement that it is exploring strategic alternatives to “maximize shareholder value.” Simply put, Insignia Systems is looking for a merger or acquisition, business combination, or other strategic transactions to remain afloat.
It’s worth noting that Insignia Systems is struggling to turn profitable. Meanwhile, the COVID-19 pandemic exacerbated its problems further. ISIG’s earnings are taking a hit from the continued weakness in its in-store signage solutions, primarily POPS (Point-Of-Purchase Services).
Insignia Systems’ POPS sales continue to decline amid increased competition and lower brand spending amid the pandemic. Moreover, management expects the segment to remain weak in the coming quarters.
During the last reported quarter, Insignia Systems announced that its POPS revenue declined in the first nine months of 2021. Looking ahead, management stated that competitive pressure could continue to hurt the POPS business in 2021. Further, the expiration of its 10-year selling agreement with News America Marketing In-Store (“News America”) could continue to remain a drag.
Lower sales continue to pressure Insignia Systems’ profitability. It’s worth noting that Insignia System posted a net loss of $2.6 million for the first nine months of 2021.
Investors’ Activity
About 2.5% of the investors holding portfolios on TipRanks have increased their exposure to Insignia Systems stock in the last seven days. However, TipRanks’ Stock Investors indicate that investors have a very negative outlook on ISIG, with 4.9% of these investors reducing their holdings in the last 30 days.
Disclosure: On the date of publication, Amit Singh had no position in any of the companies discussed in this article.
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