Since noon EST on November 28, 2016, Time Inc (NYSE:TIME) shares have risen about 17 percent. This surge comes immediately after Time Inc. rejected a buyout offer of $18 per share. Just three days ago, Time Inc. closed at $13.80 per share. The highest value the company has hit in the past 365 days was $17.66 per share. The recent buyout offer valued the company, which includes many recognizable magazines, at $1.8 billion. The offer came from Edgar Bronfman Jr., an investor who formerly served as the CEO of Warner Music Group.
Even though shares of Time Inc. have shot up recently, investors still have good reason to pause. Shares of Time Inc. are still valued below where they were early in the third quarter of this year. The elephant in the room that has been troubling investors for a few years now is that Time Inc. depends heavily on revenue from print media, which is a declining market. The company has encountered some stumbling blocks in embracing the digital frontier and remains a bit antiquated in its advertising models. In addition, Time Inc. has taken on a substantial amount of debt in order to continue to tread water, which also worries most investors. Since Time Inc. spun off from Time Warner Inc (NYSE:TWX) in June 2014, it has been steadily accumulating debt to manage its transition and acquire smaller digital companies.
Time Inc.'s rejection of the buyout offer has been generally received as a sign that the company remains confident it will be able to carve out some space for its publications in the digital world. This is encouraging for investors, but Time Inc. will have to find a way to show some serious progress in its quest to claim recognition as a viable digital producer. Investors will also have to brace themselves for continued reduction in revenue from print advertising so that Time Inc. can pursue an expansion into the digital field. The company is not expected to post any significant revenue for the last quarter of this year and is setting its sights for better prospects on 2017.