Netflix’s stock may have been immune to the coronavirus pandemic and rallied even in a volatile 2021, but it couldn’t escape seeing its own stock and most stocks another of Hollywood, to be deposed in 2022.
The streamer ended trading on Thursday at $290.00, down 58% over the past 12 months. Once often seen as the unstoppable rogue, the company led by Reed Hastings and Ted Sarandos reported losing subscribers for the first time in more than a decade on April 19, 2022. shocked investors and sent their shares down more than 35%, marking the company’s biggest single-day stock price collapse. Netflix announced it will roll back some of its spending plans, then roll out a lower price ad in key markets, and prepare to roll out a plan to charge users for password sharing in 2023. .
Those initiatives and the fact that streamers returned to subscriber growth in the third quarter — adding 2.4 million subscribers for a global total of 223 million — has made some analysts more optimistic, while others remain in wait-and-see mode.
It’s also been a tough year elsewhere for entertainment corporations and their stocks. Wire-cutting, while nothing new for traditional pay-TV providers, has accelerated in 2022 and wreaked havoc on subscription units and cable networks, which are traditionally profit centers of the giants in the industry.
That’s not all. The industry also faces questions about its ability to reverse the decline by switching to streaming. Investors have asked when big content spending to drive subscriber growth will lead to streaming profits.
That gives Wall Street tighter control over its ruler over content and other spending decisions in streaming. And more broadly, companies have ended the year reviewing their organizations for opportunities to restructure, optimize, and cut costs.
That scrutiny is compounded by a weakening advertising bias amid recession fears in 2022. Ultimately, the industry giants saw their shares end 2022 lower. strong, often underperforming the broader S&P 500 stock index’s decline, which is down 19.5% through Dec. 11. 29.
“Over the past year, media and entertainment (M&E) stocks have seen sudden moderate streaming growth, headwinds from advertising and reopening to headwinds. In reverse due to the recession, cable cuts accelerate and interest rates rise causing the multiplier to drop,” Morgan Stanley’s Benjamin Swinburne wrote in a Dec. 11, report. “As a result, 75% of the 27 companies in our M&E insurance group underperform the S&P 500.”
In addition, many Hollywood giants also have to deal with company-specific issues and themes in 2022.
The Walt Disney Company, for example, marked its biggest stock drop in decades after struggling with larger-than-expected streaming losses – $1.47 billion in Q4, more than double the $630 million reported for the same period in 2021 — and the political blunders before surprising Wall Street at the end of the year by bringing back Bob Iger as CEO to replace him. So Bob Chapek. But with the ultimate box office performance for Avatar: The Road of Water remains unclear after underperforming in the early days, the year ended with another investor debate. The company’s shares ended 2022 down 46% to $87.20 on Dec.
Meanwhile, Warner Bros. Discovery was only formed in early April, when Discovery completed its deal to buy AT&T’s WarnerMedia, and the merged company’s stock has had a rough start, falling 63.5% since then and ending years with a preoccupation with cutting costs and boosting profits. Among the initial debates between investors and Hollywood was management’s decision to scrap an almost completed project. Bat girl movies for HBO Max and other projects, resulting in the recording of a lot of content. Warner Bros. Discovery also lowered its full-year financial forecast, citing $2 billion in losses from decisions made during Warner’s ownership of AT&T.
Elsewhere, a challenging streaming space with Peacock’s highest loss — $614 million in the latest quarter, up from $520 million in the same period a year ago — and increased cord-cutting has affected Comcast, causing its share price to drop 31% in value year-over-year. process of the year.
Entertainment Corporation Sony Corp. saw its stock drop nearly 41% to $76.69 on Thursday, even as Sony Pictures announced increased box office receipts for this year’s theatrical films like undiscovered (as well as last December’s blockbuster Spider-Man: No Way Home) and increased TV licensing sales.
The messy entertainment business also affected Fox. Corp., sees its shares drop 19% in value as 2022 draws to a close, and the company run by Lachlan Murdoch is weighing whether to merge with another key part of the Murdoch family empire. or not: News Corp., owner of Dow Jones, The Wall Street Journaland Australia’s Foxtel.
An industry dominated by macroeconomic headwinds has hit AMC Networks, which lost CEO Christina Spade less than three months into the position, and signaled the need The need for hefty restructuring fees could top $475 million amid serious layoffs. shares in Zombie manufacturers are down 59% on the year since December 29.
Another bearish stock for 2022 is Lionsgate, down 53.5% to $5.44 on Dec. 29 as top execs talk about the benefits of potentially shutting down business. studio in Hollywood as soon as Starz moved into the streaming space. The goal seems to be to create two independent companies so that investors can value Starz and studio assets separately.
On the show front, retail investors’ big bets on parent company AMC Entertainment Holdings have dropped significantly in 2022 as the major exhibitor’s stock is down 40% year-on-year, closing in level of $4.14 on Dec. 29. AMC Theaters, led by CEO Adam Aron, has revealed debt restructuring plans to offset massive loans due to the pandemic.
The economic storm that continues to blanket the broader theatrical business is also affecting Cinemark, sending its stock price down 48% in 2022. The theater is looking to profit next year as the Hollywood studios return to theatrical release and streaming companies capitalize on theatrical releases after Netflix reveals play plans Glass onion: The mystery of cutlery at Cinemark, AMC Theaters and Regal Cinemas locations.
Among movie theater stocks, Imax stands out at year-end thanks to upside from Disney’s Avatar: The Road of Water movies on its screen at high prices. The tech company, which has seen its stock drop 23% in value last year, is betting on higher box office returns as well as an increase in the number of contracts and theater installations in 2023, even if there’s a question mark over the Chinese box office next year as the country ends its COVID-free policy and virus infections skyrocket.
Looking ahead, Wells Fargo analyst Steven Cahall thinks the entertainment industry will face more difficulties in the new year in the new year. “Our 2023 projections show that the media and cable sectors are responding to tougher times, both cyclically and structurally. Tough times mean tough decisions,” he wrote in a December 20 report. The Wall Street expert’s prediction is that “the sector won’t be in favor until at least cyclical pressure is on. reduction period”.
