In honor of the recent Oscars and Will Smith slapping Chris Rock, we’ll take a look at different ways of investing in the movie business. There are platforms that stream and produce movies as well as media companies that produce and distribute media. Movie theatres are also ways investors can partake in movie stocks. It feels like every time I watch a movie, producers, and partners always change. Let’s take a look at how to invest in movie stocks.
Movie Theatres
Do you know how to Invest in movie stocks? Movie theatres are a popular destination for first dates, movie premieres, cheapy Tuesdays, and groups of friends meeting before a night out. They are part of the consumer discretionary sector.
This means that these stocks perform well when the economy is good. However, when the economy is in a bad place and we have less disposable income, movie theatres have smaller audiences. Now, let’s take a look at the major movie theatre stocks available.
How to Invest in Movie Stocks: AMC Entertainment (NYSE: AMC)
Can we invest in movie stocks with AMC? AMC is the largest movie theatre chain in the world. The pandemic dealt AMC a huge financial burden. Before the pandemic, they had $10B in debt.
The pandemic added another $1.5B. There is a beginning of recovery since the restrictions faded, but it is much slower than anticipated.
Even before the pandemic hit in 2019, AMC was unprofitable.
In 2021, AMC became one of Reddit’s favorite stocks. The rise of meme stocks began. How did this affect AMC? Fundamentals became worthless.
The stock price is very volatile and doesn’t reflect the company’s business. Many investors day trade AMC instead of holding it for the long-term.
What’s next for AMC? Since the pandemic began, AMC opened more movie theatres worldwide. The number jumped from 503 in 2020 to 930 today. Fundamentally, it is solid stock, and movie watchers love the movie theatre experience. AMC will most likely bounce back in the upcoming years.
IMAX (NYSE: IMAX)
IMAX is a Canadian company that licenses its proprietary screen technology. AMC is one of its clients. They do not own theatres, but their technology is present in the majority of them. Their unique technology allows movie theatres to charge extra for IMAX screenings.
The pandemic didn’t spare IMAX. Demand was lower than usual. However, demand is on the rise once again. Furthermore, viewers always want better special effects and the company is well-positioned to meet the demand.
Fundamentally, IMAX is doing good. They accumulated debt over the last few years, but their cash position is strong. Look for a bullish run in the upcoming months.
How to Invest in Movie Stocks With Streaming Services
In the last decade, movie theatres have had to share their viewers due to the rise of streaming services. Nowadays, they even produce their original content. More and more people can watch a show or a movie from the comfort of their homes with a selection of platforms. It won’t be a surprise which streaming services are leading the way.
Netflix (NASDAQ: NFLX)
We begin this section with the big boys. Netflix had all the momentum when it started its service in 2007.
They were first-movers and clients immediately jumped on the train, and with good reason. There is an almost never-ending amount of content that is sure to reach even the pickiest of viewers.
Building a brand isn’t easy. During their first years, they had negative cash flow, but over the last decade, they’ve had positive net income consistently. We can see more and more international partnerships all over the world. Shows like ‘’Casa de Papel’’, ‘’Squid Game’’ and ‘’Lupin’’ became instant successes. In some countries, it is even possible to play video games on the app.
The pandemic greatly benefitted Netflix. Many users swarmed the platform due to lockdowns and restrictions. The number of subscribers skyrocketed but is at risk of stagnating with the pandemic (hopefully!) nearing its end. Viewers worldwide have been splitting their time with other platforms. Which ones are on the rise?
How to Invest in Movie Stocks: Walt Disney (NYSE: DIS)
Despite being founded almost 100 years ago and producing hundreds of classics for kids and adults, Disney entered the streaming market in 2019.
What impeccable timing. The platform has all its original content released throughout the decades. Did you know they are in charge of all Marvel and Star Wars movies?
That is a deciding factor for their success. They also acquired Hulu and ESPN which allows them to expand their repertoire.
ESPN allows users to experience a wide range of sports such as UFC, NFL, football games, rugby, and much more. Hulu offers a selection of cable programming and original content to add even more diversity. Disney also operates 12 theme parks across 6 resorts worldwide.
The stock is highly diversified across many business sectors. Look for even more growth once the pandemic is done and potentially a bigger market share than Netflix.
iQIYI (NASDAQ: IQ)
There’s one the majority of you aren’t familiar with. Welcome to the Netflix of China. Unlike its competitors, this platform offers a free service with ads and a premium version. Users primarily access the platform on their phones instead of computers or televisions.
Furthermore, users peaked in 2021 and have been slowly declining. There are still over 100M users in China. They also offer video games and credit cards. iQIYI isn’t as successful and its future is uncertain due to declining customers. Let’s see where they will be in a few years.
Amazon (NASDAQ: AMZN)
Prime Video is currently just shy of 200M users. Amazon also produces original content as well as existing shows. This company is the most diversified on this list. E-Commerce, books, cloud computing services, and many other sectors are touched by Amazon. Needless for me to say that they are a big player in the stock market and they have A LOT of influence.
YouTube has been gaining some ground with its streaming service. They are already the number one place for videos on the internet. YouTube is also offering popular movies and TV channels like Nickelodeon, ABC, Fox, ESPN, and many more.
The platform is adding more and more content for its users. However, YouTube isn’t public. It is owned by Google (NASDAQ: GOOGL). Needless to say, Google is one of the most successful businesses around. They can easily be compared to Amazon mentioned earlier.
Media Companies
n this final section, we will explore companies responsible for the creation of original content around the world. And they’re a way to invest in movie stocks.
Lions Gate Entertainment (NYSE: LGF.A)
We are used to seeing the Lions Gate logo at the beginning of a movie and sometimes a TV show. They produced hits such as ‘’Orange Is the New Black’’, ‘’The Hunger Games’’, ‘’Twilight’’, ‘’John Wick’’ and many more hits.
This media company owns over 16,000 movies and TV series with the help of its many subsidiaries. Their products are distributed directly to movie theatres and other platforms internationally.
Lions Gate is holding on to a lot of debt, but its revenues are strong enough to support growth in the next years.
Paramount Group Inc (NYSE: PGRE)
Paramount’s story is very similar to Lions Gate. The company produces and distributes digital content for various platforms. They are also in the video game industry, but with limited success.
Over the last decade, many media companies have been acquired by large companies. Warner Bros was acquired by AT&T (NYSE: T). In 2021, Amazon acquired Hollywood studio MGM for over $8B.
Multinational companies are diversifying their business and trying to bring content to an increasing amount of people around the world. I wouldn’t be surprised if Lions Gate and Paramount Pictures don’t get offers shortly.
Conclusion
Nowadays, investors have many different ways to invest in movies. Multinational companies are acquiring many smaller firms and there is a lot of competition between major media brands.
Ultimately, customers benefit from all this action. The quality of the content is constantly increasing and prices remain competitive. Investors also have the opportunity to invest in companies working in special effects, distribution, and production.
It is an industry with many different doors. If the pandemic ends soon, this industry is poised for substantial growth. Keep a close eye.
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