In today's fast-paced world of high-budget blockbuster films, the movie and film industry has emerged as a potentially lucrative sector for investors and tradersseeking to play on the hype and excitement of a new movie release. Recently, Mattel's Barbie and Universal Pictures' Oppenheimer announced that it raked in a summer high of US5.5M in its box office weekend. This news might get film enthusiasts and moviegoers to blow the dust off their old trading account, as they consider how they might grab a share of the pie. Wondering how you can getinvested in movies and films? With these stocks related to movie studios and film distribution companies, you can possibly reap the success of the latest Hollywood films without financing a movie or funding a production house.
What is the Movie Industry?
The movie industry is made up of institutions involved in the creation and distribution of films as a product. The pillars of filmmaking are typically technological and commercial, and include Production, Distribution and Exhibition.
This movie stock guide to help with trading and investingwill be focused specifically on distributors like Universal Pictures.
Why Investin the Movie Industry & Trade Movie Related Stocks?
Expectations of Further Growth
From the classic black-and-white era to the modern era of high-definition films, the movie industry has evolved tremendously. Despite already being a billion-dollar sector that's a prominent part of global culture, the movie industry has a good chance of further growth well into the future. This is exemplified through Grand View Research's report on the exponential growth of the movie and entertainment market. With a projected annual growth rate of 7.2% over the next 8 years, we can expect to see the movie and entertainment market rake in revenues of close to US$170B, representing more than 77% growth.
The Improving Technology Behind Filmmaking
In the digital age, we're seeing huge innovations in filmmaking technology as advancements like De-Aging and realistic Computer-Generated Imagery wow audiences. This type of technology has not only enabled the production of high-quality films, but it has also lowered the costs and simplified the process for filmmakers. Additionally, production houses may be able to put out more film because of the increased efficiency resulting from the improvement of filmmaking technology. For investors, this could mean even more opportunities to invest in production houses who are funding projects that are cost-effective and more likely to bring in greater returns.
Risks of Trading Stocks Related tothe Movie Industry
Not All Movies Are Hits
It is important to note that trading such movie industry-related stocks carries a certain degree of risk. While some film releases have enjoyed success, there are other films that have not made as much money as expected. For every hit like Mattel's Barbie, there is a flop like Disney Pixar's Elemental. While this could be due to factors such as poor marketing strategies, production costs or changing consumer habits, movie stock investors and traderswill likelybear the brunt of missteps and risk that comes with the release of a movie that bombs at the box office.
Highly Cyclical & Dependent on External Factors
While movies and films are an essential part of pop culture, their demand and supply are heavily dependent on external factors. For example, the COVID-19 pandemic was a major disruption to the movie industry. On the supply side, delays in production impacted theatrical release dates, which caused filmmakers to incur additional costs. As for demand, the closure of cinemas due to social distancing measures caused a sharp drop in movie sales worldwide.
Movie Stocks to Watch
Out of all the entertainment companies that are releasing feature films on the silver screen, here are some of the most prevalent movie stocks to add to your watchlist and consider trading.
For this list, we're defining movie stocks as stocks of companies that are impacted by movie releases. We are ranking these top movie stocks based on their market cap as of 27th July 2023 and are arranging this list in the order of descending market cap. We've also limited this list to movie stocks from companies that have released blockbuster hits in 2023.
1. Comcast Corporation (NASDAQ: CMCSA)
Market Cap: US$180.22B
Compared to the other best movie stocks on this list that have distributed one blockbuster hit, Comcast stands out from the crowd because it has delivered two heavy hitters in the movie industry. Thanks to its subsidiary Universal Pictures, moviegoers have had the chance to see both The Super Mario Bros. Movie and Oppenheimer in cinemas. With gross box office numbers that are on track to breach the US$2B mark across their run times, Comcast may have exceeded investor expectations despite having to split said revenue with Nintendo (OTC: NTDOY) for the use of its characters. Keeping all this in mind, CMCSA shares are definitely worthtaking a look at ahead of their major film releases given their track record and ability to deliver commercially successful movies.
2. The Walt Disney Company (NYSE: DIS)
Market Cap: US$155.15B
To say that the Walt Disney Company has been struggling recently may be an understatement. In between concerns over delaying its titles because of actor strikes and million-dollar losses in its cruise line, the company has seen better days when it comes to box office numbers. While Disney investors may have been disappointed with box office let-downs like Elemental and The Little Mermaid, they could be relieved to hear about the success that Guardians of the Galaxy Vol. 3 received.In America, Guardians 3 earned the number 3 spot on the US list of the best-grossing movies of 2023 by bringing in US$358,853,459. Its success may have also caused a bit of a surge in Disney’s stock price as DIS shares surged almost 5% over the May 5th 2023 weekend. With how aggressive Disney are at marketing their newest films, it might be lucrative for speculative traders and investors to keep an eye on DIS shares when referring to their film release schedule.
3. Mattel (NASDAQ: MAT)
Market Cap: US$7.58B
We can't talk about the best movie stocks to trade without mentioning the recent runaway success of Barbie. According to IMDb's list of US box office weekend sales, Barbie tops the list with its strong showing of US$162,022,044 despite the ongoing issue that is the Writers Guild of America strike. This makes the Barbie movie the biggest opening at the box office for 2023 and showcasesthe commercial success of Barbie for Mattel. While the majority ofthe profits will go to distributors Warner Brothers Discovery, Mattel would have reaped the biggest benefit from the inflow of toy and merchandise sales thanks to the viral success of the Barbie film. Although it'sstill too early to tell if this might have a significant impact on Mattel's financials and fundamentals given its toy manufacturing background, investors and traders may be buying into the hype as we see MAT shares surge close to 20% on the heels of Mattel's aggressive marketing promotions for Barbie.
Trading in shares associated withfilm production can be a thrilling journey with the potential for impressive returns. From watching out for promotional trailers to counting down the days till the film's release, it might be lucrative for speculative traders and investors to invest in movie stocks and jump in on a film's hype. However, it is crucial to approach any venture into film investing with caution and understand the potential risks involved by conducting thorough research about the potential profitability of the film. Ultimately, trading in movie stocks ahead of their release schedule is speculative in nature and should be done with caution.
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