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« | Home | »

Major plunge for IFL stock

By Zach Arnold | May 30, 2007

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Why is today the day that this stock is dropping hard?

Update: Here’s the latest SEC information. The IFL S-1 filing from earlier in the month was solidified yesterday with a ‘notice of effectiveness.’ FO wannabe stock analysts – have at it and try to explain in plain English what this all means.

Topics: IFL, Media, Zach Arnold | 19 Comments » | Permalink | Trackback |

19 Responses to “Major plunge for IFL stock”

  1. Extreme TKO says:

    I’m not 100% but I’m guessing with the recent ratings being super low, and the fact that the press is tearing into the UFC 71 “quick fights”, people might not be as impressed with the sport, and also with the lack of interest in the IFL. I personally think the IFL is like the place where fighters who can’t make it in the UFC/PRIDE go (Sam Hogar, Vernon “Tiger” White, ect). I watch the IFL because it’s still MMA, and I watch anything I can on MMA, but I’d guess the lack of ratings might be a problem for the stocks.

  2. Grape Knee High says:

    I think the bad ratings have been in the air for a while, so to speak, but there was a big sell-off in China earlier today. The Shanghai Index was down 6.5% and the US exchanges also started lower for the day as a result. I suspect this spark from China spurred some sells of IFL; most of the rest of the US market is down today as well.

  3. Body_Shots says:

    The Board believes that the increase in the number of authorized shares is necessary to provide us with the ability and flexibility to raise additional capital that is necessary to fund the business in the future. If this proposal is approved, we could raise this capital through public or private equity offerings and adopt additional benefit plans, without the need to seek stockholder approval at that time. IFL is still in the early stages of building its business and needs the flexibility to raise additional capital as opportunities present themselves. The company had losses in 2006 and the first quarter of 2007, and expects to incur losses for the remainder of 2007. As a result, the company will need to raise additional capital to fund future operations and to continue building the IFL brand name, expanding its TV exposure and increasing the market for its team-based mixed martial arts league.

    Maybe this?

  4. Zach Arnold says:

    I don’t think it explains why today (and not yesterday or other moments) is the day for the massive drop.

  5. Grape Knee High says:

    Zach, seriously, it was the China sell-off that sparked it. The fundamentals of IFL have always looked pretty bad but I think it got buoyed by the broader bull market. As soon as a global event (like the Shanghai sell-off earlier today) happens that makes people reconsider their more speculative positions, they start dumping their losers to cut their losses.

  6. Zach Arnold says:

    I was addressing Body Shots. :)

    That’s an awfully hard hit for the IFL. Jim Cramer usually harps on the fact that when a sector is red hot, even the stocks with poor fundamentals in that sector get a lift. The IFL is getting zero push from all the UFC media saturation from this past week.

    Update: I owe Mr. Body Shots an apology. Please forgive me…

  7. Brutal. This may seem like a dumb question. but when the stock plunges like this, does it mean they literally have less money to work with? They were saying they may not have enough capital to make it out of 2007, so with the stock price almost halving does that mean they’ve got even less time to turn this around?

  8. Euthyphro says:

    I’m with Grape on this one. This is a nothing stock with a low price and very small volume. Even one or two large shareholders selling off their positions in risky bets (like this one) would be enough to trigger a major fall like this. Essentially, once the first few people sold, their volume was enough to put a major dent in the “ask” price. When that happened, people who have automatic notices to sell the stock when it goes below a certain point (let’s say $3.00) will flood the market with their shares. Then, the people who had automatic notices to sell below $2.00 flood with their shares.

    For a stock like this, it’s not uncommon, and it’ll rebound to some extent by the end of the day if it hasn’t already. People will recognize what happened and buy their positions back, but the IFL will suffer a tidy loss on the day.

  9. Euthyphro says:

    Brutal. This may seem like a dumb question. but when the stock plunges like this, does it mean they literally have less money to work with? They were saying they may not have enough capital to make it out of 2007, so with the stock price almost halving does that mean they’ve got even less time to turn this around?

    In a word, no. The value of a stock doesn’t relate to the company’s assets on hand/outstanding debts. The owners got their cash when they first made shares available, and their own personal stake in the company (which is represented by the number of shares they hold) is what took a hit here.

    For the IFL as a business, this means that the owners have less money to dump into the company when things go further south (But that’s not really a valid concern for the owners right now. They have far more money than this).

  10. Zack says:

    The way Zuffa is running the WEC is exactly what the IFL should’ve done, only the IFL would’ve had the budget for bigger stars.

    All the IFL TV shows are a waste because there’s no historical context. You never know when the fights happened. People like to follow fighters and see how they progress through their careers. With the IFL, everything feels out of order. You don’t know if you’re watching something from last week or 6 months ago, without checking a fight finder.

    They sank so much money into a promotion with no marquee fighters and no live television. Those are the two things that would get people fired up. There are a lot of guys in the IFL that I enjoy watching…Horodescki (sp?), Bart, Big Ben, Goes, Markam, etc but I want to see them fight live, and in fights that either progress or hinder their careers.

  11. lucasmloring says:

    im gonna wait til the shares fall to $.12 and then buy up the whole company for like $100.00. The I will take away the ropes and add a hot tar pit all around the ring and randomly throw blunt weapons in every time there is a lull in the action. im gonna that the sport back to the way SEG invisioned it!

  12. Good point Zack but stock people don’t care about the actual product, just the finances. According to some people on MMA.tv the stock is tanking because the S-1 went effective and now people are allowed to ditch their stock so people are jumping off the sinking ship.

  13. UFCDaily.com says:

    That would make sense. I own stocks which will have significant drops even though news is good, the market is up, or they report nothing at all. Its just the nature of the market. Also rumors are the stock analysts don’t like the team format :D

  14. Grape Knee High says:

    If today is the first day the shareholders of restricted stock are able to sell, that would definitely explain the sell-off. This being the case, my China explanation was clearly off; the stock would have plummeted today regardless of what else was going on in the market.

  15. Euthyphro says:

    Fightlinker, I looked into this a bit more and here’s what we’ve got. The S-1 allowed private placement shares (what automatically went to private equity investors and other “lucky” people when the stock was first listed) to now sell in the public market. Looks like these extra shares got sold off — no confidence from private investors that the company will succeed. I didn’t have time to delve deeper, but I would guess that, if this timeframe wasn’t built in to the initial offering, they filed to allow for this sell-off some time after the 60 Minutes story — when the stock shot up. Since then it has plummeted, but is still above their low, low buy-in level.

    So, the part about this coming from the general market downturn looks to be incorrect. The initial selloff was triggered by the newfound freedom of private placement stockholders to release their shares to the public. After that, the additional fall comes from automatic requests to sell if the stock goes below a certain amount.

    What we can read from this:

    Investors think the IFL is screwed and are taking their money before the stock hits $1.25 a share so they can take whatever profits they can. Not very confidence-inspiring.

  16. 45 Huddle says:

    Off topic…

    According to the Fight Network, Sakuraba has been cleared to fight.

  17. David says:

    1) I re-bought the IFLI stock @ 1.30 or 1.40 and am hoping my 1k investment doubles.

    2) Is it just me or K-1 is making some FATTY yakuza bribes to the CSAC lol

  18. Tomer Chen says:

    As of today, the price is floating around $1.05 and the Bid-Ask Spread has been at .01 and at one point was even $0.00. Not a good sign for the IFL in terms of their Market Value of Equity…

  19. [...] alone should leave you ROTFLYAO!!!11!one! Part of the irony was that when I wrote it, IFL stock was in the middle of a fun freefall, caused by an S-1 going in effect which allowed original investors to finally sell off their stock. [...]

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