Digital Domain Media Group (PINK:DDMGQ), a producer of Hollywood special effects, has declared for Chapter 11 bankruptcy. The shares are now selling for about 10 cents each.
Back in November 2011, Digital Domain came public on the Nasdaq. But it was a small deal, with the company issuing 4.9 million shares at $8.50 each. The underwriter was the boutique operator Roth Capital.
Founded over 20 years ago, Digital Domain has certainly had an illustrious history. For example, the company helped with the special effects for Pirates of the Caribbean, Transformers and Titanic.
But such things weren’t enough to maintain the business. After all, the film industry is unpredictable and hits-driven. And this is why the survivors are usually mega companies like Viacom (NASDAQ:VIA) and Disney (NYSE:DIS), which have the scale to deal with the volatility.
As for Digital Domain, it has already sold its production business for $15 million to Searchlight Capital Partners. So there’s little left for shareholders. Keep in mind that total assets are $205 million and liabilities are about $214 million.
Tom Taulli runs the InvestorPlace blog IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli. As of this writing, he did not own a position in any of the aforementioned securities.
A long-time follower of the IPO scene, back in 1999 Tom started one of the first sites in the space called WebIPO. It was a place where investors got research as well as access to deals for the dot-com boom. Tom also wrote the top-selling book, Investing in IPOs. In it, he covers all the aspects of analyzing an IPO, such as reading the prospectus, detecting the risk factors and understanding some of the arcane regulations. But don’t worry — if that process is too intimidating for you, thankfully Tom will do the legwork for you right here in the IPO Playbook blog.
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