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Shares in Canadian media group Thunderbird Entertainment (CVE:TBRD) rose last week as it reported revenue for the first three months of the year of C$29 million and adjusted EBITDA of C$6.9 million. Revenue was C$4.7 million for Q1 last year.

Thunderbird Entertainment also generated free cash flow of C$4.5 million for the three months ending 31 March, after retiring the balance of a C$6 million term loan provided by the Royal Bank of Canada in 2018.

Thunderbird Entertainment shares were up from C$0.96 on Tuesday, to C$1.32 this morning, representing a gain of more than 37% in less than a week.

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The Armchair Trader first started covering Thunderbird Entertainment on 27 April at which point it was trading at C$1.02. We think the company is well-positioned to benefit from the increasing demand for content from online streaming services like Netflix and its competitors. Thunderbird already has access to a number of interesting properties, like animated programs Beat Bugs and Last Kids On Earth.

“Throughout Covid-19, the company has continued to grow and deliver industry leading results, with Q3 being Thunderbird’s best quarter to date,” commented Brian Paes-Braga, chairman of Thunderbird Entertainment. “Thunderbird’s unique business model allows the company to thrive. By remaining fully operational, Thunderbird has created new roles and hired additional team members to meet new demand from buyers looking to fill schedules with premium quality content.”

As of 30 March, Thunderbird’s team of more than 1000 crew members across all its divisions in Canada and the US had been set up to work remotely. Quick actions have allowed it to continue its work and the company has confirmed that all its productions in development are moving forward.

Among the partners it already works with are Netflix, NBCUniversal, Nickelodeon, PBS and WGBH.

Pandemic has accelerated demand for Thunderbird Entertainment content

The onset of the pandemic has accelerated the need for content: according to a report from Nielsen, there was an 85% increase in consumption in March 2020. We expect this will remain high in April and May. Because much of Thunderbird’s output is animated, many of its existing productions have been able to move forward.

Thunderbird also told investors that it expects demand for content from traditional broadcasters like Netflix and Disney+ to remain steady. It has had to hire and onboard 30 new team members to meet the needs of increased workflow from the start of April.

During the third quarter Thunderbird has had 20 programs in various stages of production and delivered 43 half hour episodes and 21 one hour episodes during this period from the factual, scripted and kids and family divisions. All of the one hour episodes and 24 of the half hour episodes were based on company IP. It was also named to Fast Company’s annual list of the World’s Most Innovative Companies for 2020.

As we pointed out in our note on 27 April, competition in the streaming entertainment area is only expected to become more fierce going forward with increased demand for the sort of content that Thunderbird produces. The company seems well-positioned to emerge from the Covid-19 epidemic with its business and key commercial relationships intact, and a growing demand for its content.

Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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