The stock market much like films, have a very unstable rate of return, while one week there may be an increase in demand for a certain stock, the other may see a sharp decline in share prices. Well Indian film production giant, Eros faced a similar problem recently at the New York stock market when their share prices crashed by 47% in a week.
This massive selloff on the New York Stock Exchange (NYSE) came after analysts raised red flags on the company’s receivables and user count of its streaming service ErosNow. In fact the production major lost 17% on Friday after analysts at Wells Fargo, downgraded the stock citing several concerns. Chief among the investor grievances was the reported spike in receivables in the past five quarters that featured receivables jumping to $215 million from around $110 million in the last one year. While the management assured investors that it would be reined in, the top brass at Eros also suggested that the rising receivables were possibly on account of certain transactions on content rights in the UAE. Adding to this last week reports surfaced on twitter accusing the production house of fraudulent accounting claiming that the company had indulged in fraudulent and dishonest financial market activity, and that UAE sales were a “sham” while questioning the company’s claim of ErosNow having 30 million users.
Earlier the company headed by Kishore Lulla was in line to be India’s answer to the US based streaming giant NetFlix, and had even witnessed a 135% rise in its stock price, from around $17 a share in April to nearly $40 in early August. However, following this sellout at the end of last week, the stock was valued at $14.65.
If that wasn’t enough the company’s Mumbai listed subsidiary, Eros International Media, too witnessed a 20% decline in stock prices from Rs 547 to Rs 374 as of today, despite management talk about delisting.