Investors in Cinedigm (NASDAQ:CIDM) and CIDM stock have been on a wild ride of late. The digital entertainment company has been an investor favorite in the past for its growth potential in its core business.
However, of late, anticipation around the company’s move into the non-fungible token (NFT) space has provided another catalyst for this stock. Shares of CIDM stock appreciated to more than $2 per share in late-March on this news.
Since then, shares have given up most of these gains, trading back at pre-announcement levels. That said, this is still a stock that’s roughly doubled-up investors who bought at the beginning of the year, so expectations remain bullish on CIDM right now.
In this article, I’m going to to dive into what Cinedigm does, and why this stock has become hot of late.
CIDM Stock: An Intriguing Core Business Model
With the market searching for growth, investors may be enticed to consider CIDM stock at these levels.
Indeed, Cinedigm’s platform on its own is quite appealing. The company offers subscribers access to thousands of movies and TV episodes on its core platform. Additionally, the company’s been working on beefing up its product offering, enticing users and investors alike.
Cinedigm recently made a couple of announcements in this regard. Late last month, the company announced a partnership agreement with Frndly TV. The company noted this partnership “is a perfect fit for our goal of bringing to market family-friendly TV at a family-friendly price.”
Additionally, Cinedigm has been working on acquiring more content for its cinema division. The company also announced the acquisition of the content library of Films Around the World last month. As a result of the deal, Cinedigm added more than 150 feature films, as well as the rights to remake more than 150 films as well.
These moves signal Cinedigm is a company willing to be aggressive with growing its content platform. For investors bullish on the digital media space, this strategy is one that is likely to be viewed positively.
NFT Surge Driving Near-term Demand in Cinedigm
There have been many market-moving events in Q1 of this year. Among these, the rise of NFTs is one investors have paid close attention to.
Non-fungible tokens are essentially unique cryptographic tokens created using blockchain technology that can’t be duplicated. Any digital file can be converted into a NFT. However, the rarity of these collectibles is what has driven the value in the NFT space of late. A recent sale of a painting by digital artist Beeple for a record $69 million earlier this year highlights the interest in these digital collectibles.
Companies like Cinedigm that have stepped up to the plate in adopting NFTs into their business strategy have seen some pretty impressive appreciation of late. In late-March, CIDM stock surged approximately 60% over a few trading days on a tweet announcing this news.
The company’s CEO noted “Cinedigm is excited about the rise in consumer adoption and commercial prospects for #NFT…Given our extensive film library, deep connection to fandom and collectibles, and $CIDM’s strong brand partnerships and technology capabilities, I have directed our product team to develop new NFT products to enhance the user experience of our loyal audiences.”
Cinedigm did note that this NFT strategy was set to be complementary to its existing core mission. In other words, content creation and its core platform still remain the primary focus of Cinedigm’s executive team. However, this move has spurred a lot of interest in the stock. Investors appear to continue to attempt to quantify the value NFT offerings have for such companies today.
Conclusion
Cinedigm is certainly in interesting company for small cap growth investors to consider. This is a company operating in a high-growth market, with what appears to be tons of potential right now.
That said, CIDM stock does represent a speculative play today. Buying any company on NFT news has turned out to be disappointing for investors in recent weeks. Accordingly, I’d expect to see some additional volatility over the near-term as investors continue to assess the true value of these stocks today.
Personally, Cinedigm doesn’t meet my fundamental requirements to be considered a stock I’d look at right now. Accordingly, I’m on the sidelines with this stock.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article.
