Amid last week’s coronavirus-driven sharemarket plunge, one of the few stocks (and the only media related one) to stand against the selling wave was US streaming video giant, Netflix.
It did better than all the rest of the media (and most other) companies here and in the US, UK and Europe, with shares up 0.8%. It’s a message from the market that its rivals should take on board. While every major media and tech company did poorly last week in the most volatile trading since the GFC, only one was seen as a “safe haven” in the sector that has driven the great boom of the past two years.
It seems investors reckon Netflix is the ideal stock to invest in if there is a COVID-19 pandemic that confines hundreds of millions of people to their homes and forces entertainment and sport venues to close in coming months.
Unlike its rivals, Netflix doesn’t require its users to interact with the public, doesn’t depend on advertising, and has just one product: streaming video. Its rivals all have business models that include dealing with people, or revenues from advertising (which, if the GFC is any guide, is one of the first expenses to be chopped back in a slowdown).
Netflix’s standout performance is more than an odd judgement by stockmarket investors. It helps once again underline why the days of the legacy media companies are numbered. Just look at how some of its rivals did last week and in February.
Seven West Media shares fell 13.1% last week and 34% in February, while News Corp shares did very poorly (in the US market), dropping 16% last week and nearly 11% over February. News Corp’s 61% owned real estate group REA lost 13.7% in value last week and 13.8% for February.
Nine’s ownership of Stan, the number two streaming service in Australia, was not enough to protect it in the same way Netflix’s single service did. Nine shares dropped 8.65% (most of which came on Friday) and 16% for February. Nine’s real estate arm, Domain Holdings saw its shares slide 11.4% last week and 15.8% for the month.
No other media stock rose last week. US media groups did poorly, such as the Murdoch-controlled Fox which lost 14.2% last week and 16.2% for February. ITV in the UK saw its shares fall 10.7% last week and 13.9% in the month. And Disney, which now owns a big part of the old Murdoch Fox empire, did worse, losing 15.3% of its value last week and 15% for the month.
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