Top executives in the media and entertainment industry are looking forward to the second half of 2023 after a challenging start to the year. Stock sell-offs and analyst downgrades were a common occurrence, with Hollywood stocks experiencing sharp declines due to pressure from Wall Street to make streaming businesses profitable, increased cord-cutting pressures, and a challenging advertising market during an inflation-induced recession fears.
Despite these headwinds, there have been some success stories in the industry. Music streamer Spotify saw a significant gain of 103 percent in the first six months of 2023, thanks to cost-cutting measures and increased confidence in its profit outlook. Wells Fargo analyst Steven Cahall upgraded the stock in February, stating that Spotify is on the path to sustainable profitability.
Another company that performed well in the first half of the year is Lionsgate. Its shares finished around 60 percent higher and saw a 100 percent jump in share price during the first three months of 2023. Strong financial results and an upcoming split into two companies have made Wall Street analysts bullish on Lionsgate’s prospects. There is potential for the studio business alone to be valued significantly higher than its current trading value, according to Rosenblatt Securities analyst Barton Crockett.
Netflix also attracted positive attention from Wall Street, as its shares gained 49.4 percent in the first half of the year. Analysts from TD Cowen and Pivotal Research Group raised their stock price targets for Netflix, citing the company’s unique growth story and potential for revenue increase through paid sharing and an ad-supported product.
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Roku, a streaming platform, experienced a 42 percent increase in its stock price during the first half of the year. The company’s partnership with CBS Sports to become the U.S. media partner for Formula E contributed to its success.
While some companies thrived, others struggled. Disney’s stock remained virtually unchanged during the first six months of the year, despite strategic changes implemented by CEO Bob Iger. Analysts have maintained their overweight ratings for Disney, citing the company’s restructuring and undervalued content. Paramount Global also faced challenges as questions over its streaming strategy persisted. A dividend cut and restructuring led to a decline in stock performance.
Exhibition stocks, which rely on the box office, had mixed results. Cinemark’s stock gained 97 percent in the first half of the year, driven by signs of a box office recovery. AMC Entertainment saw a modest 10 percent increase, while Imax Corp. experienced a 15.5 percent rise in its stock price.
Overall, the media and entertainment industry has experienced a mix of success and challenges in the first half of 2023. Companies like Spotify, Lionsgate, Netflix, and Roku have seen significant gains and positive analyst sentiment. However, others like Disney and Paramount Global have faced difficulties in adapting to changing industry trends. As the industry continues to evolve, executives will need to navigate these challenges and capitalize on opportunities for growth in the second half of the year.
