Media stocks have been on a wild ride in the first half of 2023. On the latest episode of Variety podcast Strictly Business, Variety Intelligence Platform media analyst Heidi Chung breaks down how Disney, Netflix, Comcast and other leading lights of media and entertainment have performed so far this year.
Wells Fargo analyst Steven Cahall downgraded Fox Corp. stock to “underweight” from “equal weight” as lower ratings at Fox News Channel and cord-cutting threaten to depress earnings. Cahall lowered his target price for Fox stock to $31 a share from his previous $35 a share target and Friday’s close of $31.92. According to Cahall, FNC accounts for about 80% of Fox Corp.’s earnings.
Many media stocks that had been heavily impacted since the beginning of the year witnessed sharply higher pricing on Wednesday following Tuesday’s positive results for Netflix’s recent quarter. Netflix media stocks rose 7.3% on Wednesday to $216.44 at the close of trading.
Stocks were flattened Monday by a wave of angst over the fast-spreading Omicron variant, exacerbated by pending interest rate hikes and economic tightening the Fed signaled last week, and after Sen. Joe Manchin scuttled President Biden’s key social policy legislation. All major indexes fell on the first day of a shortened trading week ahead of the holidays.
One year after panic on Wall Street, media stocks including ViacomCBS, Discovery and Disney are booming. Investors are bullish on companies with streaming services.
Investors eyeing media stocks battered during the coronavirus pandemic from a TV ad recession and cord-cutting should tune into the streaming opportunities of TV networks for potential earnings growth, Morgan Stanley analyst Benjamin Swinburne argued Tuesday. Swinburne said the impact of cord-cutting and ad revenue drops is already priced into TV-centered media stocks, so the next leg up for share prices should come from proof entertainment players can defy Netflix and drive sustainable earnings from the streaming space.
Exclusives
Although media stocks were hit with dramatic weekly declines along with the major stock market indices at large — around 14% over the last five days, due to mounting concerns over coronavirus — a number of companies witnessed gains and recovered to some extent on Friday.
Media companies — both traditional and digital — witnessed strong mid-30% average hikes in their 2019 stock prices, with Roku, The Trade Desk, Charter Communications and Facebook posting some of the biggest percentage increases. The Dow Jones U.S. Broadcasting & Entertainment index was up 31% to 1,592. The Dow Jones U.S. Media Index rose 30% to 1,062.
Looking at the second-quarter financial and operating results released so far by cable operators, analyst Michael Nathanson of MoffettNathanson Research said cord-cutting has become “freaking ugly” and the headwinds faced by media companies have gotten “much worse.”
Media stocks grew 25% in the first half of the year, better than the broader stock market indices. The Dow Jones U.S. Broadcasting & Entertainment index rose 24.9% for the first six months of 2019 to 1,518.14 — through midday Monday trading. The broader Dow Jones U.S. Media Index is up 24% to 1014. Dow Jones’s U.S. Media Agency index grew 13% to 617.54.
he difficult 2018 stock market year extended to media, advertising tech and other related companies — with many witnessing big double-digit percentage price declines. The Dow Jones U.S. Media Sector Total Stock Market Index sank 6.9% to 7,997 for the year — just hours before the stock market’s closing for 2018. Concerns over a U.S. and global economic slowdown, as well as possible U.S. induced tariffs, are the main reasons for the stock market pullback this year.
Due to big tariffs against other countries that are coming, major market indexes were hit with steep 2.5% to 3% declines on Thursday — with media stocks caught in the downdraft.
TV Stocks Mostly Down At 2017 Midpoint
Exceptions among pure-play television operators were Gray and Tribune, as was Comcast/NBC among the networks.
Concerns over alleged troubling actions of the Trump Administration triggered a stock market market sell off early on Wednesday — and media companies were not immune.
Media stocks took a beating Wednesday as concerns about sluggish ad sales and cord-cutting left investors in sell mode. Shares of 21st Century Fox were down 5.01% at the end of trading at $28.35, Discovery Communications fell 4.22% to $26.78, CBS Corp. dipped 3.35% to $63.46, Disney slid 2.40% to $111.62, and Comcast dropped 2.03% to $38.54.
U.S. media stocks have pulled back somewhat from their recent run-up, yet they still score big results since the election. The Dow Jones U.S. Broadcasting & Entertainment Index is up 4.5% from the election on Nov. 8 through Dec. 2. It had been as high as 7%. On Dec. 2, the index closed down 1.4% to 1,149.69.
After a day when Viacom lost 21%, it took another 4.7% decline on Wednesday to close at $31.37. Walt Disney sank 3.8% to $88.85. On Tuesday, before it released its quarterly earnings, Disney was slightly up 0.2% — before sinking over 4% in aftermarket trading.
Major media stocks fell on Wednesday after Time Warner trimmed its profit outlook for 2016. Disney, Comcast, Discovery and AMC were all down markedly as well. Even CBS, which reported strong earnings on Tuesday afternoon, was down slightly.
Wall Street’s meltdown isn’t over yet. On the heels of Monday’s wild market swings, stock watchers are predicting the investor enthusiasm that powered the equities surge in recent years is headed for a brutal reality check. Monday’s market turmoil, spurred by concerns about the health of China’s economy, metastasized into a panic that shows no sign of abetting.
Continuing concerns about China and the U.S. economy threw the stock market into another tailspin on Monday — with media stocks getting caught in the downdraft. At one point the Dow Jones 30 Industrials index was down 6%, or around 1,000 points, in midday trading — although it recovered somewhat, down just under 4%, off 650 points. Many media stocks were down 3% to 5% during the day.
You could call it an August Reset. A sell-off that started more than two weeks ago was refueled Thursday morning when a prominent analyst, Bernstein’s Todd Juenger, downgraded Disney and Time Warner.
The competition was tough — most media stocks not only appreciated in 2012, they handily beat the benchmark Standard & Poor’s 500 which was up 13.4%. Comcast led the pack of Big Media conglomerates with shares up 57.6%, followed by News Corp (+43.0%), CBS (+40.2%), Disney (+32.8%), Time Warner (+32.4%) and Viacom (+16.1%).
Media stocks — by and large — had a big year, more than outperforming other industries. Walt Disney grew 32% higher to $49.85; Comcast is 54% higher to $37.30; Time Warner, up 31% at $47.48; and News Corp., a 47% improvement to $24.91 a share. Similarly, CBS is up 27% from a year ago to $37.33 a share as of close Dec. 26. Discovery Communications grew at a leading 58% rate to $62.95.
More bad economic news resulted in another round of harsh and sharp percentage drops to many stock market indices on Thursday — with media companies again feeling a bigger pinch.
Stocks fell across the board Thursday in the worst day of trading since 2008. The drop was fueled by a global credit crisis and a weak U.S. economic recovery, with the expectation that Friday’s jobs report will add to the worries. The Dow fell 4.3%, the S&P 500 fell 4.8%, and the Nasdaq fell 5.1%. Most media stocks took a larger hit than the market as a whole.
