The global outbreak of the novel coronavirus has disrupted the very fabric of every part of humanity. No industry was left untouched by the devastating effects caused by the pandemic, amid the chaos, smaller businesses had the brunt of it – losing massive revenues as stay-at-home orders were put in place by nearly every government around the world.
Although the first few months of 2020 didn’t seem fruitful at all, some industries which were hard-hit still outperformed market analysis – and stock prices quickly bounced back from mid-February and March 2020 indicators. It has been pointed out that gambling stocks as well as movie and music streaming stocks, for example spotify, are to be watched more closely as potential benefactors of pandemic-driven consumer behavior.
The first London Value Investor Conference was held in April 2012 and it has since grown to become the largest gathering of Value Investors in Europe, bringing together some of the best investors every year. At this year’s conference, held on May 19th, Simon Brewer, the former CIO of Morgan Stanley and Senior Adviser to Read More
As Americans were forced to work-from-home, limited freedom of movement, high unemployment rates, and millions of permanent lay-offs companies in the entertainment industry saw some light at the end of the tunnel with stock prices making a firm, but steady comeback.
Here’s a look at how entertainment stocks performed during the pandemic:
The online streaming platform reported an estimated 15.77 million paid subscribers in April 2020 as new stay-at-home orders were issued by local governments. This ripple effect was noticed on the stock market, as the stock price increased more than 65%. In the second quarter of 2020, Netflix’s per-share price increased from $550 to $670, and the streaming giant reported an additional 12.5 million net subscribers close to the end of July 2020. Netflix movies may not be the only gauge to measure this segment, but it is main indicator.
2020 had Disney scrambling in all directions as the entertainment giant saw all of its theme parks temporarily closed, halting film and tv productions, and cancelation of live sporting events. Throughout most of 2020, Disney stocks took some knocks, with earnings dropping 60% in the second quarter of 2020, and the company estimated the pandemic caused them to lose nearly $3 billion. Luckily, by the end of the year, Disney reported 120 million online subscribers, roughly 70 million being Disney+ subscribers, and in late December, share prices climbed 19%.
The online music streaming platform had a big win in 2020, as Spotify saw the addition of 144 million new paying subscribers rounding the total to 320 million active users. Spotify outperformed market expectations, with revenue rising by 15% from 2019 to $2.1 billion. The streaming app made a rebound thanks to its 1.9 million podcasts and closed the year off with roughly 340 million users, 150 million being premium subscribers raising revenue to EUR2.2 billion at the end of 2020.
For Caesars Entertainment, 2020 was a year full of problems, not forgetting its 2015 bankruptcy. The company entered a joint venture with Walt Disney’s ESPN and DraftKings, giving the company a good rebound with better sports betting and the online gambling market quickly taking off. This industry could see a $150 billion revenue stream per year, with 25 US states legalizing sports betting.
Sony has for long diversified its earnings, rather focusing on what works well, and brings in more money. During the height of lockdown restrictions, nearly 83% of consumers were playing video games, and as the company released its next-generation PlayStation 5 Console, it locked in more online users, pushing them to make use of Sony’s online games and download options. Overall, consumer purchasing of video game hardware was up 37% compared to 2019, and Sony could see its winnings coming in, with nearly 7.6 million PS 5 Consoles sold just in 2020.
Social media stocks
Social media stocks were climbing, reaching new heights in 2020 as consumers had hours to spend on apps such as Instagram, Facebook, and TikTok.
Facebook & Instagram
Facebook Inc. purchased the entirety of Instagram back in 2012, although there is no direct Instagram stock, traders can buy stock via its parent company Facebook Inc. In 2020, Facebook stock rose by 33% and saw more than 3.2 billion active users across its family of apps such as Instagram and WhatsApp. Additionally, influencers and celebrities pushed social media stocks to new heights, with names like Paris Hilton using social media as a way to showcase designer products, fitness routines, and insight into her lifestyle. Influencers such as Hilton has given social media stocks a way to break through the glass ceiling – with younger users consuming more news, entertainment, and trends on apps such as Facebook, Instagram, and TikTok.
Titanic shits occured in the entertainment industry. It is now clear that those who thrived in the music and entertainment sector understood how to tap into multiple digital revenue streams with diverse monetization tactics.