MDC Partners Stock Drops 60% as Company Misses Q3 Performance Goals

By Patrick Coffee 

The stock value of holding company MDC Partners hit a 7-year low this week, dropping precipitously before the opening bell on Thursday and declining further on Friday morning after yesterday’s Q3 revenues failed to meet performance targets.

Ogilvy’s global chief digital officer tweeted this morning that the holding company’s total market value is now less than that of the agencies it owns.

As of this moment, the stock value is down more than 60 percent from $8.35 on Wednesday, before the report went public, to just over $3 at the time we published this post. After 11 AM, the stock began to rebound a bit in what appears to be heavy trading.

mdc partners stock 2

This drop came after an earnings call yesterday afternoon in which CEO Scott Kaufmann discussed results that he said were “not good enough” and the company hired LionTree Advisors to assist in “evaluating the Company’s financial and capital structure strategy” moving forward.

As noted in the press release that preceded the call, the company lost $33.5 million in Q3 compared to $8.6 million for the third quarter of 2015. MDC also lowered its yearly revenue guidance (read: estimated totals for 2016) from between $1.39-$1.42 billion to $1.365-$1.375 billion and its EBITDA from $205 million-$215 million to $170 million-$180 million.

In a statement, Kaufmann wrote:

“We are reducing expenses, optimizing our partner portfolio, and re-prioritizing how we allocate capital, all while investing in our partners to ensure that they have the right resources to continue to drive outstanding performance for our clients. While some of these efforts carry near-term costs, which is contributing to our lower full year financial projections, we expect to reap the benefits in 2017.”

Much of the restructuring came in response to the accounting scandal that forced founder Miles Nadal to resign last summer; he later agreed to pay his former company $21 million after the SEC began investigating its finances.

This summer, MDC acquired Swedish agency Forsman & Bodenfors. It also completed its acquisition of 72andSunny last year.

A spokesperson declined to comment further this morning.