TomorrowWorld Problems Didn't Go Unnoticed By Wall Street as SFX Shares Plummet
SFX Entertainment shares fell as much as 12.5 percent on news of stranded fans and upcoming refunds.
SFX Entertainment shares fell 7.5 percent on Monday on reports that heavy rainfall created untenable conditions for many attendees of the TomorrowWorld festival in Chattahoochee Hills, a rural area between Atlanta and the Alabama border. The costs of refunds and lost concessions from this major event -- expected to draw 190,000 people over three days -- could damage the third-quarter earnings of the EDM promoter.
On Sunday, SFX announced in a statement the festival would be accessible only to on-site campers and refunds would be made available to those affected. Not only is the promoter refunding the cost of Sunday tickets (plus service, shipping and payment fees) it is also refunding parking, shuttle, locker costs, as well as the amount attendees paid to upgrade to VIP-level experiences.
With transportation crippled, many unprepared festival-goers were left sleeping on the side of the road in wet conditions. Although the number of people affected is not known, various reports suggest thousands of people were left without accommodations. Inside the event, the promoter shuffled the lineup and closed four of nine stages.
Due to other problems that have decimated SFX's stock, Monday's decline was actually small in dollar terms. The 42-cent closing price was just 3 cents below Friday's closing price of 0.45. With the share price so low, the stock can still trade in a very narrow band when it experiences seemingly large decline. Case in point: the 12.5 percent in midday trading that took SFX shares to an all-time low of 40 cents represented only a 5 cent decline.
Part of Monday's decline can be attributed to large declines in all stock markets. The Dow dropped 1.9 percent, the S&P 500 declined 2.6 percent and the tech-heavy Nasdaq fell 3.0 percent. Other music stocks also fell. SiriusXM Radio sank 2.2 percent to $3.71. Pandora dropped 2.2 percent to $20.41. Live Nation fell 1.6 percent to $24.01.