Wall Street Eyes Disney, Netflix, Apple, Fox – Deadline


Covid, neither gone nor forgotten in 2021, has beaten investors and markets for another year as attempts at business as usual were hampered by cycles of angst and rebound. Defensive stocks, growth stocks, value stocks, home stocks were in one day, released the next day. After a volatile year of ups and downs, the broader markets ended on a high note, but it was mixed for the media.

The S&P 500, considered the most representative of the three major indices, closed 2021 up 27%, its third year of double-digit gains.

But Disney had its worst year since 2008. Discovery, ViacomCBS, AT&T and AMC Networks also finished down. Netflix, Fox, Lionsgate, and Sony have all increased. Comcast was flat. Fubo, a leader last year, went into hiding. Newcomer Endeavor, which went public in April, has had a great run, as have Live Nation and big broadcasters Nexstar, Gray Television and Tegna (which is also for sale).

The technology was also a story of ups and downs – the first led by Apple and Google, the parent company of YouTube. Facebook did well despite such bad press that it changed its name (to Meta). Amazon was higher. But Spotify, Twitter, Roku, and Snap have been knocked out. Apple remains widely beloved for its position in mobile devices and computers and for the growing weight of its services division (which includes Apple TV +). It’s a bit expensive with a market cap of $ 2.9 trillion (the first stock expected to reach $ 3 trillion).

In most cases, stocks weren’t immediately in 2021. Wherever they ended up settling in the end versus the beginning of the ear, this followed big gyrations over the 12 months. .

The themes included shares of memes with skewed (or democratized, depending on who you ask) prices by retail traders offering shares, like AMC Entertainment from the start of the year. The March crash of obscure hedge fund Archegos brought down the shares of Discovery and ViacomCBS and they never recovered. Consolidation – real and rumored – was everywhere. But the bigger deal, one that aims to reshape the landscape, had surprisingly little benefit to the actions of the players involved – AT&T or Discovery. Lionsgate’s stock was so low he said he could sell or give away Starz. It helped me.

“The theme of consolidation, the theme of mergers and acquisitions is an annuity every year” for media stocks, said a Wall Streeter. The bullish case for Lionsgate stock: a spin-off from Starz that requires investors to rate each separately. The bear case: two smaller companies that are both “subscale,” he said.

Other media-related issues include dwindling return of legacy assets and cable cuts, massive spending on content, importance of live sports, big management realignments around streaming, international expansion, wagon battles and slowing broadband growth, in the wider economic backdrop of Covid (original from Delta to Omicron), inflation, supply chain issues, economic tightening, rate hikes pending interest and constant fighting for key legislation on Capitol Hill.

Speaking of Capitol Hill, 2022 is a political year. “The midterm elections should be pretty interesting with both the House and the Senate, so each seat is likely to be a record fundraising amount and a record mid-year and midterm political cycle. Businesses related to political spending should do well, ”one analyst said, citing Nexstar, Gray and Fox stations. The politics will also be a boon to Fox News ratings. Other groups of stations are much smaller parts of larger companies, so the impact will be limited.

Disney holds a special place among showbiz stocks as the only one included in the DJIA, and it was the worst performing on the 30-stock index last year. It lost 13%, its biggest drop since 2008, when it fell almost 30%. It’s a stark contrast to 2020, when it was supported by the rapid growth of Disney +. Excitement cooled as lockdowns ended and subscriber growth slowed even though theme parks and mainstream media companies, while stabilizing somewhat, were unable to compensate for the uncertainty. investors, especially with ongoing Covid.

Disney closed 2021 at $ 155 – down from a low of $ 142 earlier this fall, but well above a high of $ 203 in March, when theme parks and theaters reopened and streaming was still on. becoming gangbusters. Not all, but most analysts who follow it, see it as a “buy” based on price – it’s starting to look cheap. The lesson Spider Man: No Path Home the juggernaut does no harm. Superheroes, Disney’s force, are the safest bet in theaters today. (Of note, Bob Iger tweeted his final goodbye tonight. Bob Chapek and a handful of new leaders will take over.)

The Sony / Disney movie Spider-Man also sparked an uptick in exhibition stocks, pushing them down to their lows although they all closed lower – except the AMC meme stock. Its shares rose 1,253% for the year – a surreal number for a surreal year in the life of the giant theater chain run by Adam Aron. It started its rise in January with GameStop and has continued, seeing its stock drop from under two dollars to nearly $ 73. It stabilized to close at $ 27, but even that level, many analysts say, is not justified by fundamentals. It doesn’t seem to matter – maybe the fundamentals will catch up eventually. Meanwhile, Aron participated in a Harvard Business School study, engaging his Redditors, constantly tweeting, setting up a special portal for investors offering free popcorn, and accepting crypto payments.

Imax is generally a favorite in the space because blockbusters – the bread and butter of the large format chain – recover the fastest. And international markets, where Imax is strong, are not yet under the same SVOD pressures as the United States.

Speaking of streaming pressure: Netflix, the leading player, the unoccupied and recognized ruler of this field, can feel it. It ended the year at $ 602, down from a low of $ 478, but down well from a high of $ 700. Yet the company led by Reed Hastings and Ted Sarandos is skyrocketing. It was the emphasis on international production that triumphed with Squid game, and he digs a toe into the games. It’s used to store blips when streaming subscriber growth is slower than Wall Street anticipates for a quarter here or a quarter there (an annoyance that Disney first experienced for the first time). There are still a few skeptics, but not many. “For me, they won the game. When you watch who wins streaming Netflix, ”one analyst said, echoing a common refrain.


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