Box Office Rebound: Entertainment Stocks Deliver Strong Returns

The following research was conducted by Christine Short, Vice President of Research at Wall Street Horizon.

• Movie stocks have done well in 2023 despite mixed consumer spending trends
• While ticket sales are up from a year ago, data shows nothing tops Netflix-and-chill at home
• We spotlight key entertainment dates as the summer season heats up

Ditching both monitors to watch a movie on the big screen isn’t a bad way to wind down after a long day and busy earnings season. But volatility could be on the way in the space amid a Hollywood writers’ strike, dismal results at Paramount Global (PARA) and cost cuts at Netflix (NFLX).

Prepare your popcorn

The Wall Street Horizon is known for monitoring the dates of market-moving earnings events, corporate conferences, and dozens of other types of events, but one of our personal favorites is the Releases category of movies. Ahead of the summer box office period and before the unofficial season kicks off (Memorial Day weekend), let’s take a look at the state of the movie industry. You might just find catalysts to add glitz and glamor to your portfolio.

Box office sales continue to improve

To kick off the opening credits, data from IMDb shows that this year’s cumulative box office total continues to build from pandemic lows. While 2020 started as usual in the United States, the industry came to a halt in mid-March of that year and did not recover until mid-2021. Over the past couple of years – despite the disruption of the omicron variant early last year – more and more people have been attending movie night. Year-to-date 2023 box office revenue is 28% higher than year-ago levels. Sure, inflation was a bit high during this period, but it’s still a high total. However, compared to the pre-COVID amount of 2019, the amount spent is still down 26% (not adjusted for inflation).

Better box office numbers in 2023, still behind pre-pandemic totals

Source: IMDb

So which movie producer steals the show? As you might have guessed, Netflix is ​​in the spotlight with 45 releases slated for late May through Labor Day weekend. NFLX has rallied in recent days following the announcement of its new advertising tier to boost revenue. Disney (DIS) and Comcast (CMCSA) are the distant second and third places in the movie tally.

Netflix leads the number of movie releases for the summer

Shift to service spending helps entertainment companies

NFLX is undoubtedly the star of the show, but stocks are only 15% higher on the year. Lions Gate Entertainment (LGF.A) was the “Best Actor in a Leading Role” of 2023 (be patient with those puns). LGF.A has returned 91% since the start of the year. More broadly, the communication services sector – where most of these companies are located – has alternated with the information technology sector as the best performing slice of the S&P 500 over the year.

Consumer discretionary (arguably where going to the movies might come under) was also a sector blockbuster – rising more than 16% through mid-May. Whether the summer season will be comedy or tragedy for the band remains to be seen, but without Paramount Global, the band enjoys strong momentum.

Widespread gains for filmmaker stocks

Source: Stockcharts.com

Folder Events

Ahead of the unofficial summer kickoff, JP Morgan is hosting its 51st annual TMT Global Technology, Media and Communications Conference this week, Monday through Wednesday. Disney, Comcast and Warner Bros. Discovery (WBD), among others, are expected to present. Investors should stay tuned for possible industry news during the event.

After that, the next key event is Lions Gate’s fourth quarter 2023 earnings report, which is confirmed for Thursday, May 25 AMC. Ahead of Netflix’s second-quarter earnings report on July 18 and a slew of EPS reports later that month and in early August, three filmmakers hold annual general meetings: Netflix on June 1, Comcast on June 7, and Sony ( SONY) on June 20.

Upcoming attraction: fallout

Speaking of Sony, a broader trend we’re noticing is another rise in spinoffs – the Tokyo-based consumer electronics company is reportedly considering a spinoff of its financial services arm. Alibaba (BABA) is another consumer name playing the fallout game – stay tuned for more coverage of this trend from us.

Closing credits

Will entertainment companies continue to make profits? As consumer spending trends fluctuate like a thriller to economic data watchers, uncertainty is high in this stock group; be sure to watch key events to see how the script plays out.

For more information on the data from this report, please email: [email protected]

Wall Street Horizon provides traders and institutional investors with the most accurate and comprehensive forward-looking event data. Covering 9,000 businesses globally, we offer over 40 types of corporate events via a range of delivery options from machine-readable files to API solutions to streaming streams. By keeping clients informed of critical market-influencing events and event revisions, our data enables finance professionals to take advantage of or avoid the volatility that ensues.

Christine Short, vice president of research at Wall Street Horizon, focuses on publishing research on Wall Street Horizon’s event data covering 9,000 global stocks in the market. Over the past 15 years in the financial data industry, his research has been featured widely in the financial media, including regular appearances on networks such as CNBC and Fox to talk about corporate earnings and the economy.

Twitter: @ChristineLShort

The author may hold positions in the mentioned titles. Any opinions expressed herein are solely those of the author and in no way represent the views or opinions of any other person or entity..