Phoenix New Media (FENG) Stock: Why The Price Fell Today

By Amit Chowdhry ● Nov 16, 2021
  • The stock price of Phoenix New Media Ltd (NYSE: FENG) fell by over 14% pre-market today. This is why it happened.

The stock price of Phoenix New Media Ltd (NYSE: FENG) fell by over 14% pre-market today. Investors are responding negatively to the company’s unaudited financial results for the third quarter ended September 30, 2021.

Q3 2021 Financial Results

— Total revenues in the third quarter of 2021 decreased by 19.3% to RMB244.6 million (US$38.0 million) from RMB303.0 million in the same period of 2020, primarily due to the year-over-year decline in the Company’s net advertising revenues.

— Net advertising revenues in the third quarter of 2021 decreased by 23.0% to RMB216.6 million (US$33.6 million) from RMB281.3 million in the same period of 2020, mainly due to the reduction in advertising spending of advertisers from certain industries and intensified industry-wide competition in the third quarter of 2021.

— Paid services revenues in the third quarter of 2021 increased by 29.0% to RMB28.0 million (US$4.4 million) from RMB21.7 million in the same period of 2020. Revenues from paid contents in the third quarter of 2021 increased by 69.7% to RMB15.1 million (US$2.4 million) from RMB8.9 million in the same period of 2020, mainly caused by the increase in revenues from licensing fees related to audio books. Revenues from E-commerce and others in the third quarter of 2021 increased by 0.8% to RMB12.9 million (US$2.0 million) from RMB12.8 million in the same period of 2020.

— Total operating expenses in the third quarter of 2021 increased by 63.3% to RMB296.2 million (US$46.0 million) from RMB181.4 million in the same period of 2020, primarily attributable to the increase in general and administrative expenses due to the RMB140.4 million (US$21.8 million) of allowance for credit losses that was recognized in the third quarter of 2021 related to the entire amount of accounts receivable and notes receivable from Evergrande Group caused by Evergrande’s operating results. Share-based compensation included in operating expenses in the third quarter of 2021 was RMB1.1 million (US$0.2 million), compared to RMB1.4 million in the same period of 2020.

— Loss from operations in the third quarter of 2021 was RMB206.3 million (US$32.0 million), compared to loss from operations of RMB28.4 million in the same period of 2020. Operating margin in the third quarter of 2021 was negative 84.3%, compared to negative 9.4% in the same period of 2020.

— Non-GAAP loss from operations in the third quarter of 2021, which excluded share-based compensation, was RMB204.8 million (US$31.8 million), compared to non-GAAP loss from operations of RMB26.7 million in the same period of 2020. Non-GAAP operating margin in the third quarter of 2021, excluding share-based compensation, was negative 83.7%, compared to negative 8.8% in the same period of 2020.

— Net loss from continuing operations attributable to Phoenix New Media Limited in the third quarter of 2021 was RMB134.0 million (US$20.8 million), compared to net loss from continuing operations attributable to Phoenix New Media Limited of RMB0.9 million in the same period of 2020. Net margin from continuing operations in the third quarter of 2021 was negative 54.8%, compared to negative 0.3% in the same period of 2020. Net loss from continuing operations per diluted ordinary share in the third quarter of 2021 was RMB0.23 (US$0.04), compared to a net loss from continuing operations per diluted ordinary share of RMB0.00 in the same period of 2020.

— Non-GAAP net loss from continuing operations attributable to Phoenix New Media Limited, which excluded share-based compensation, income or loss from equity method investments, net of impairment, changes in fair value of loan related to co-sale of Particle shares and impairment of available-for-sale debt investments, was RMB135.4 million (US$21.0 million) in the third quarter of 2021, compared to non-GAAP net income from continuing operations attributable to Phoenix New Media Limited of RMB1.3 million in the same period of 2020. Non-GAAP net margin from continuing operations in the third quarter of 2021 was negative 55.3%, compared to positive 0.4% in the same period of 2020. Non-GAAP net loss from continuing operations per diluted ADS[3] in the third quarter of 2021 was RMB1.86 (US$0.29), compared to non-GAAP net income from continuing operations per diluted ADS of RMB0.02 in the same period of 2020.

— In the third quarter of 2021, the company’s weighted average number of ADSs used in the computation of diluted net loss per ADS was 72,790,541. As of September 30, 2021, the Company had a total of 582,324,325 ordinary shares outstanding, or the equivalent of 72,790,541 ADSs.

— For the fourth quarter of 2021, the company expects its total revenues to be between RMB256.1 million and RMB276.1 million; net advertising revenues are expected to be between RMB239.7 million and RMB254.7 million; and paid services revenues are expected to be between RMB16.4 million and RMB21.4 million.

KEY QUOTES:

“Faced with pressures from the current macroeconomic uncertainties, we remained steadfast in our commitment to further developing our core competitive differentiation in original content production capabilities. During the third quarter of 2021, we deepened our collaboration with Phoenix TV in content production and event execution and sales, creating a cohesive and integrated media group and further enhancing our brand influence. In addition, we upgraded our iFeng app to better incorporate exclusive content from Phoenix TV and improved the app’s features and content distribution. Meanwhile, we launched our own Multi-Channel Network and developed our monetization channels on third-party platforms. Going forward, we plan to remain prudent in evaluating business initiatives, align our business with shifting industry dynamics, and elevate our brand influences through consistent delivery of original content.”

— Shuang Liu, CEO of Phoenix New Media

“In the third quarter, we experienced increasing challenges from intensified industry-wide competition and a slowdown in the macroeconomic environment. In response, we re-strategized while proactively managing our expenses, streamlining our operations, and optimizing our team structure to improve operating efficiency. As we drive the evolution of our content ecosystem and monetization channels, we will continue to focus on generating more diverse revenue streams to increase shareholder value in the future.”

— Edward Lu, CFO of Phoenix New Media

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.