5. National CineMedia, Inc. (NASDAQ:NCMI)
Short Interest: 6.10%
Number of Hedge Fund Holders: 12
National CineMedia (NASDAQ:NCMI) is a media company operating in the cinema advertising sector in the United States. It comprises over 18,400 screens in around 14,400 theatres nationwide in 190 Designated Market Areas. The company presents several formats of The Noovie Show, depending upon its theatre circuit of operation. This includes Post-Showtime advertising inventory after the advertised showtime, and the selling of advertising on its LEN, a series of screens in movie theatre lobbies.
In addition, the platform also undertakes other forms of promotions and advertisements in theatre lobbies, including selling mobile and digital online advertising through its Audience Accelerator. The Audience Accelerator works across various Noovie digital properties and complementary out-of-home venues, including convenience stores, restaurants, and even college campuses.
The cinema industry as a whole thrived in Q2 2024 as the public entered into the summer. The box office landed $1.9 billion, primarily due to the release of widely popular and highly anticipated releases such as Inside Out 2, Bad Boys: Ride or Die, and Kingdom of the Planet of the Apes. National CineMedia’s (NASDAQ:NCMI) primary audience is Gen Z and Millenials, collectively representing more than 70% of its viewership in Q2, with a reach of around 30 million individuals.
This trend highlights the extent to which the company resonates with its core audience. The company has also added 11 new advertisers with major cinema advertising campaigns year-to-date. In addition, its Silence Your Cell Phones courtesy partnership became the largest revenue driver in its premium offering. Courtesy advertising also experienced a boom, growing by 88% year over year primarily due to travel and tech industry partners.
The company is running on a strong profitability model. Its platinum advertising offering in Q2 became the second-best quarter ever in 2024, trailing behind Q4 2019. Sales in Q2 2024 increased more than 15 times compared to the same period in 2023. Public interest in this exclusive offering is continuing to grow, with advertisers from several premier categories planning to include their campaigns in the coming quarter. These categories include entertainment, government, and dining. In addition, an increasing interest in experiential marketing is also driving demand and opening up new opportunities for the company.
On August 15, Benchmark upgraded National CineMedia (NASDAQ:NCMI) to a Buy from Speculative Buy rating on account of its growth optimism. In addition, B. Riley raised the stock’s price target to $8.50 from $7.50. Its current price target of $7.03 implies an upside of 10.24% from current levels. 12 hedge funds hold stakes in the stock, with Blantyre Capital holding the highest stake worth $117.05 million. The stock ranks fifth on our list of the 10 worst advertising stocks to buy according to short sellers.
