FDA Approval of Pfizer COVID-19 Vaccine Boosts Movie Theater Stocks

It was a good day for publicly-traded movie theater stocks. Shares of AMC Entertainment, Cinemark (parent of Regal Cinemas) and Imax Aug. 23 at market closed up  almost 7%, respectively, as investors welcomed the U.S. Food and Drug Administration officially approving the Pfizer coronavirus vaccine.

The vaccine, which has been known as the Pfizer-BioNTech COVID-19 Vaccine, will now be marketed as Comirnaty (koe-mir’-na-tee), for the prevention of COVID-19 disease in individuals 16 years of age and older, according to the FDA. The vaccine also continues to be available under emergency use authorization, including for individuals 12 through 15 years of age, and for the administration of a third dose in certain immunocompromised individuals.

A recent Kaiser Family Foundation survey found that 31% of respondents cited FDA approval key to getting a vaccine. Government approval will also encourage private businesses to mandate vaccinations among their employees.

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The approval is a huge win for the theatrical industry, which has been trying to woo apprehensive moviegoers back into cinemas. The past weekend was the lowest domestic box office in two months, generating less than $60 million in ticket sales.

“While millions of people have already safely received COVID-19 vaccines, we recognize that for some, the FDA approval of a vaccine may now instill additional confidence to get vaccinated,” Acting FDA Commissioner Janet Woodcock, M.D., said in a statement. “Today’s milestone puts us one step closer to altering the course of this pandemic in the U.S.”

AMC CEO Adam Aron, earlier this month on the exhibitor’s fiscal call, welcomed increased vaccination rates among consumers — a trend that mirrors the world’s largest movie exhibitor’s ongoing efforts to sanitize theaters, ventilation and air filtration systems, in addition to ticketless movie screenings.

“Vaccination increasing is very important for AMC and for the movie theater industry generally,” Aron said on the conference call.

FuboTV Set to Join Russell 3000 Index

FuboTV, the sports-themed online live TV streaming platform, June 22 announced it is set to join the broad-market Russell 3000 Index on June 28, according to a preliminary list of index additions posted June 4.

Annual Russell indexes capture the 4,000 largest U.S. stocks, ranking them by total market capitalization. Membership in the U.S. Russell 3000 Index, which remains in place for one year, means automatic inclusion in the Russell 1000 Index or Russell 2000 Index as well as the appropriate growth and value style indexes. Russell determines membership for its indexes primarily by objective, market-capitalization rankings and style attributes.

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Russell indexes are widely used by investment managers and institutional investors for index funds and as benchmarks for active investment strategies. Approximately $10.6 trillion in assets are benchmarked against Russell’s U.S. indexes.

“We are pleased with the interest fuboTV has received from the investor community in such a short period following our listing on the New York Stock Exchange last October,” co-founder/CEO David Gandler said in a statement. “The addition of fuboTV to the [index] is an important milestone for the company as we stay laser-focused on defining a new category of interactive television while delivering significant shareholder value.”

In addition to online TV service, FuboTV is aggressively entering the online sports betting business — a market both Disney’s ESPN and Fox Sports are gravitating towards.

Vizio Announces Closing of $257 Million IPO

Vizio, the Irvine, Calif.-based consumer electronics brand, March 29 announced the closing of an initial public offering of 12.25 million Class A shares at purchase price of $21 per share, or $257.2 million. The shares began trading on the New York Stock Exchange March 25 under the symbol “VZIO.”

Vizio over the past year has branched out into ad-supported video, inking multiple distribution deals with content holders for its Internet-connected SmartCast televisions.

The company last year announced the launch of a dozen free kids and family linear TV channels, Movies Anywhere transactional movie purchase platform, and NBCUniversal’s Peacock streaming service.

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“With increasing consumption on smart TVs, we are happy to make it easy for Peacock customers with Vizio smart televisions to stream all our content,” Maggie McLean Suniewick, president of business development and partnerships for Peacock, said in a statement last summer. “We offer Peacock as free to our distribution partners because we want people everyone to enjoy Peacock where and when they want it.”

Vizio shares are currently trading at $21.82 per share in midday trading.

GameStop Meets Social Media Investor Mob

When GameStop, the world’s largest video game retailer, started the year less than a month ago, its stock was trading around $19 per share — underscoring the market’s ongoing concern about packaged-media gaming in the digital age.

But that lull has been blown to pieces over the past few days as speculative at-home investors took to social media platform Reddit and began playing up the stock to some of the platform’s 3 million users. In the process, GameStop shares skyrocketed 1,700% to $347 per share, triggering mandatory trading stops by Nasdaq in an attempt to keep the stock, and the market, stable. The stock was up 8,949% (!) over the past 12 months.

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“You combine the power of technology, which allows you … to magnify your individual impact, with some use of leverage and very targeted bets, they can have a significant influence, particularly on areas of vulnerability because of the short positions,”  Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC.

GameStop shares sank early on Jan. 28 as trading platforms including Robinhood and Interactive Brokers restricted trading in the video game retailer. The stock opened at $265 a share and briefly rose to $483 before plummeting to $112. As of 11:45 a.m. EST the stock had rebounded to $225.

The frenzy has defied some Wall Street hedge funds and analysts unaccustomed to seeing day-traders on social media trigger a “short squeeze,” which occurs when a stock skyrockets quickly in value, forcing short sellers (including hedge funds) who had bet that the stock price would fall, to buy again in order to forestall even greater losses. It’s a cruel trading strategy magnified by “mob rule,” with some participants looking for paper wins at the expense of others.

“This is gaining cult-like status,” said Quincy Krosby with Prudential Financial. “It is a pack of traders and the pack is gaining momentum. The retail crowd is not just taking over the shorts and it’s taking over the headlines.”

Indeed, GameStop has been the biggest trending retail market story this week. Longtime video game analyst Michael Pachter contends GameStop is well-positioned to be a primary beneficiary of the new PlayStation and Xbox consoles from Sony and Microsoft, respectively. The video game industry concluded a record 2020 that saw revenue explode to $57 billion, with December sales up 25% due to the new consoles.

“We remain quite optimistic that [GameStop] will return to profitability by fiscal-year 2021,” Pachter wrote optimistically in a Jan. 11 note.

Fast-forward to the present and Pachter shakes his head at the craziness while maintaining a “neutral” rating on the GME stock he values at $19 per share.

“It’s just a feeding frenzy,” Pachter said in a media interview. “There’s nobody in this stock based on fundamentals.”

Indeed, recent fundamentals saw GME worldwide sales results for the nine-week holiday period, ended Jan. 2, increase 4.8% in comparable store sales and 309% in e-commerce sales. But total sales declined 3.1%, driven by an 11% decrease in GameStop’s store base due to a planned “de-densification” strategy, temporary store closures around the world due to pandemic-related government mandates, and lower foot traffic in stores.

“The guys buying [GME shares] at $300 think some greater fool will buy at $400, and so far the greater fools  keep showing up,” Pachter said. “It’s a pyramid scheme.”

Sen. Elizabeth Warren (D-Mass.), a longtime advocate for stricter Wall Street regulations, says the uproar from institutional investors about GameStop trading is disingenuous in the face of the investment industry’s long history of questionable self-dealings and operating counter to actual economic concerns.

“For years, the same hedge funds, private equity firms, and wealthy investors dismayed by the GameStop trades have treated the stock market like their own personal casino while everyone else pays the price,” Warren said in a Jan. 27 social media post.

GameStop Stock Skyrockets During Wall Street Debate

Shares of GameStop, the world’s largest video game retailer, shot up 50% in pre-market trading as the company’s stock opened around $90 per share — almost five times higher than 14 days ago. The reason: An ongoing battle between short sellers and investors on the future of retail gaming.

The video game industry just concluded a record 2020 that saw revenue explode to $57 billion, with December sales up 25% due to new game consoles from Sony PlayStation and Microsoft Xbox.

Texas-based GameStop, which has struggled to remain relevant during the ongoing transition to digital gaming, saw operations further threatened during the early days of the pandemic. Then following increased numbers of home-bound consumers due to government-mandated orders to help stop the spread of the coronavirus, business fortunes began to rise.

On Jan. 11, GameStop announced the addition of new board members, including Ryan Cohen, co-founder of Chewy. That move set off a battle of words between short-selling firm Citron Research and speculative buyers organizing on social media. Sales of company shares exploded with more than 194 million shares changing hands on Jan. 22 — up more than eight times the daily average of 23.8 million shares.

In the process, the stock shot up from $2.57 per share on April 3, 2020, to close to $76.76 on Jan. 22, 2021.

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For myriad investors looking to short the stock, i.e. borrowing stock through a broker with hopes to profit from a decline in share prices, the rising stock price wiped out their endgame.

“[GameStop] is a failing mall-based retailer,” Andrew Left, CEO of Citron, said in a YouTube video — adding that anyone buying GameStop shares at elevated prices were “the suckers at this poker game.” Investors kept buying shares anyway.

GameStop earlier in the month reported a 4.8% increase in same-store sales during the nine-week holiday period ended Jan. 2, 2021, and a 309% increase in e-commerce sales.  Total sales declined 3.1%.

“The company won’t execute a turnaround by selling custom gaming PCs or collectibles,” wrote one investor. “This isn’t a deep value stock anymore. It’s a momentum bubble.”

Another Investor Wants Say on GameStop Restructuring; Shares Up 20% in Pre-Market Trading

Everyone wants a seat on a resurgence bandwagon. After Sony and Microsoft disclosed winter release dates and pricing for next generation PlayStation 5 and Xbox Series X and Series S video game consoles, interest in retail chain GameStop and how it’s run is booming — at least afterhours.

RC Ventures Sept. 21 increased its stake in GameStop to 9.9% from 9.6%, and said it had met with the retailer’s CEO George Sherman and senior management. No doubt Ryan Cohen (“RC”) wants a seat at the table entering the winter holiday retail season. And when Hestia Capital Partners and Permit Capital Enterprise Fund, who own about 7.3% of the video game retailer’s outstanding shares, joined the GameStop board in June, Cohen’s desire makes sense.

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And the market apparently agrees, sending GameStop shares up more than 20% in aftermarket trading to $10.54 per share. That followed a general retail decline yesterday that saw the chain’s shares close down 7.6% at $8.75 per share.

Regardless, GameStop shares are up 100% over the past two months with the chain realizing $200 million in cost restructuring in 2020 — notable achievements in a market jittery as it sees GameStop as a relic of the past when consumers were going to physical stores to buy, sell, and trade video games.

Purnha Investment Research contends investors and consumers may be ignoring the power of GameStop’s brand in the gaming space. It says that after years of restructuring, the GME stock is trading at valuations cheaper than other restructuring plays in the retail space.

“What the market has yet to acknowledge is that all is still not lost,” Purnha wrote in a Sept. 22 note.

Indeed, the firm notes that GameStop has been able to fulfill 70% of all online purchases picked up at local stores — even within an hour or two. With the new consoles have a disk drive, they continue to cater to a gamer playing both physical and digital software — at least for the next several years.

“Retail stores play a strategically important role for console manufacturers — be it for brand building, maintaining the relationship with hardcore users and collectors, educating customers, or sale of accessories,” Purnha wrote.

Netflix Stock Up 83% Over Past 12 Months

Netflix keeps firing on all cylinders; the latest Wall Street salvo coming from RBC Capital Markets, which tagged the subscription streaming video behemoth with an “outperform” stock rating.

Citing an internal survey from the U.S., U.K. and India suggesting satisfied subscribers and low churn levels, RBC says Netflix shares can grow 13% to $620 per share, up from the current $549 share price valuation. The news sent Netflix shares up 3.8% in midmorning trading. Netflix ended its most-recent fiscal period with 190 million subscribers.

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Netflix, Roku Close Near Record Highs on Wall Street

Wall Street continues its love affair with over-the-top video, sending shares of Netflix and Roku near record highs at market close on Aug. 26. Netflix ended trading at $547.53 per share, which was less than 0.003% off the record close of $548.73 set last month.

Roku closed at $164.28, which was just 3.3% off the streaming media device manufacturer’s all-time high of $169. 86.

Both stocks, which collaboratively created the SVOD market in 2008, slipped in early trading the next day, Aug. 27. As of 9:15 a.m. PT, Netflix was back down to $529.70, while Roku was at $161.

The gains came after both stocks received kudos this week from Wall Street firms, including Citigroup Research and Piper Sanders — the latter suggesting Netflix bested all streaming video services among survey respondents/subscribers once the COVID-19 crisis is over. In addition, individual analysts on Seeking Alpha praised the companies for their resilience during the COVID-19 pandemic.

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“Roku will be able to translate solid operational improvements into accelerating revenue growth and probably improving profit margins too,” Andres Cardenal wrote on Aug. 14 in a note underlying why he thinks the stock is undervalued.

Separately,  Vishesh Raisinghani considers Roku the “ultimate winner” of the streaming wars driven by surging user base and average-revenue-per-user (ARPU) doubling within the next few years.

“[Roku] isn’t perceived as a threat or a competitor by any of the content creators … [and is] “small enough to minimally annoy device manufacturers such as Amazon or Google,” Raisinghani wrote.

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Meanwhile, Beulah Meriam K, writing on Seeking Alpha, said Netflix’s ongoing content gains trump ARPU and sub growth. The analyst contends the promotion of Ted Sarandos to co-CEO underscored the company’s faith in original content separating itself from the competition.

“The first sign that ‘content is, indeed, king’ is the fact that Sarandos has been [promoted],” Meriam K wrote on Aug. 18. “Few [competitors] focus on the content side of things; and, at the end of the day, isn’t that the real growth engine? It’s fine to look at the effects once in a while but, without getting to the underlying cause, it’s merely mathematical probability and error-prone projections.”

Roku Firing on All Cylinders During Pandemic

With the coronavirus pandemic throwing conventional entertainment consumption on its ear, streaming video device pioneer Roku has emerged a star on Wall Street as increasing numbers of consumers migrate to over-the-top video.

Roku, together with Netflix more than 12 years ago, helped create the subscription streaming VOD market. It now markets a line of Chinese-made smart televisions, in addition to a branded operating system for third-party consumer electronics. The San Jose, Calif.-based company operates an ad-supported VOD platform, The Roku Channel, and boasts more than 40 million platform subscribers.

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In its most-recent fiscal period, Roku saw revenue surge 41% to $43 million, with streaming hours skyrocketing 65% to 14.6 billion. Average revenue per subscribers rose 18% to $24.92 — underscoring the fact a lot of people use Roku to access third-party streaming services such as Netflix, Disney+, Amazon Prime Video and Hulu.

Last Friday, Roku joined Apple and Google in distributing the Sept. 4 premium VOD (dubbed “Premier Access” by Disney) debut of the much-delayed live-action film adaptation of Mulan.

Citigroup Research analyst Jason Bazinet, in an Aug. 26 note, believes Roku will increase its platform sub base to 125 million subs by 2022, with revenue per active account growing from $23 in 2019 to $32  in the next two years.

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“In the U.S., we think there are just two firms: Netflix and Roku,” Bazinet wrote. “Their business models couldn’t be more different. But, the fate of the equity we suspect is similar. Both turn on sub growth and rising value per sub.”

Indeed, with increased numbers of consumers housebound due to the pandemic, the stay-at-home market has proven a boon for Roku with platform and player revenue up 46% and 35%, respectively, since last year.

But Roku is hedging much of its future on AVOD, contending that the traditional linear TV business model will migrate to connected televisions it either manufactures and/or empowers.

According to Magna Global, U.S. TV ad spending is expected to decline 24% and domestic digital ad spending is projected to drop 5%. Roku claims its monetized video ad impressions grew about 50% in the most-recent fiscal quarter — with first-time ad buyers up 40% year-on-year. The retention rate among advertisers spending $1 million or more in the first half of 2019 was 92%.

“Our performance advertising business, a newer category catering to direct response advertisers, grew 346% year-over-year, aided in part by marketers re-evaluating their social media spending,” CEO Anthony Wood and CFO Steve Louden wrote in the shareholder letter.

In June, Roku launched “OneView Ad Platform,” a proprietary shopper data partnership with supermarket giant Kroger that targets and measures advertising using retail purchase data.

“When we look at the major tech players, there doesn’t seem to be dominant IPTV strategy,” Bazinet wrote. “Alphabet [parent of Google/YouTube) and Roku cover the entire waterfront: they sell IPTV hardware, push their TV OS and hope to monetize IP video with their app that sits inside the OS.

“Other players such as Amazon, Apple and Netflix are more focused on a narrower slice of IPTV opportunities.”

 

The ‘Hits’ Keep Coming for Apple TV+

NEWS ANALYSIS — Since its launch a week before Disney+ last year, Apple TV+ has struggled to achieve support in the media and among online observers. Despite its corporate parent’s record market valuation ($2.1 trillion!) this week, Apple TV+ is often viewed as an underwhelming missed opportunity.

Apple TV+ is seen as having the worst-quality content (60%), the least amount of variety (64%) and the most unfriendly user interface (64%), according to a recent Flixed.io survey of 1,300 respondents. By comparison, respondents hailed Netflix for the best content quality (89%), content variety (88%), user interface (85%), and viewing recommendations (69%).

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Surprisingly, half of streamers use at least three or more paid video platforms, averaging three hours or more watching content at least five days per week. More people prefer cable TV than Disney+ and Apple TV+ combined. With only 57% of users finding it easy to explore new content, Apple TV+ users spend the most time deciding what to watch on average (16 minutes).

Bernstein analyst Toni Sacconaghi estimates that fewer than 10 million people have signed up for the free 12-month Apple TV+ subscription in the company’s most-recent fiscal quarter. He characterized the tally as “surprisingly low” for a brand as well-known as Apple, which hasn’t officially released any OTT video subscriber data.

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Research firm Antenna said Apple realized a 10% spike in new subs from March 14 to 16 as the coronavirus spread in the United States. The firm said the increase was the lowest of any major streaming service.

Apple reportedly will spend $6 billion on original content in 2020, buttressing a slate that currently includes “Dickinson,” “See,” “Ghostwriter,” “For All Mankind,” “Helpsters,” “Hala” and “Little America,” among others.

“[Apple is] still not in [OTT video] with both feet,” media executive Barry Diller told a podcast. “They’ve put some capital in, but relatively little [for Apple]. They’re not making a major effort.”

Wedbush Securities analyst Michael Pachter contends that despite a major marketing effort around Apple TV+, the finished product thus far has been underwhelming.

“Apple TV+ only had a handful of shows at launch and no catalog,” Pachter wrote in a post.