Southern Cross Media Group Ltd (ASX: SXL) shares rocketed over 80% higher in May but is the Aussie media group in the buy zone with its current share price?
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Why the Southern Cross Media share price surged in May
Southern Cross completed an equity raising and provided a trading update on 6 May. The Aussie media group launched a fully underwritten equity raising which included an institutional placement and a 1.75-for-1 pro-rata, non-renounceable entitlement offer. This raised $169 million at 9 cents per share for Southern Cross and helped to strengthen the balance sheet.
The trading update provided some good news with the group achieving positive earnings before interest, tax, depreciation and amortisation (EBITDA) in April. Significant operating cost reductions helped to offset the decline in revenues.
The Southern Cross Media share price was volatile in May and regularly featured in the week's biggest movers. However, the Aussie media group moved the most last week when it rocketed over 70% higher. Last week's share price gains were so strong that the media group was even sent an ASX Price Query. Southern Cross advised the securities exchange operator that it could not explain why its share price had risen so much.
Is the ASX media group in the buy zone?
Southern Cross Media shares are now trading at $0.23 per share. That gives the Aussie media group a $613 million market capitalisation but it was worth 4 times that much back in July 2019.
This says to me that COVID-19 hasn't been the only factor weighing on the group's share price. Regional television and radio has been doing it tough for a while but the pandemic certainly hasn't helped with revenues.
I still think the Aussie media group's shares are a speculative buy right now. There's a lot of volatility in the share price and still more uncertainty in the months ahead.
Foolish takeaway
The Southern Cross Media Group share price could be cheap at $0.23, but I won't be buying in just yet.
