The stock market just completed its worst January to June six-month period in over 50 years. After suffering a drop of 20.6%, the market has officially entered “bear” territory, with many analysts fearing that a recession will soon follow.
While the drop has afflicted all sectors, entertainment stocks have suffered particularly steep drops. The theatrical exhibition has fared comparatively well, with IMAX down only 6.7% and Cinemark dropping 8%. Cinema chains have been insulated somewhat by a steady climb in the box office during the first half of 2022. Blockbuster releases such as THE BATMAN, TOP GUN: MAVERICK, and JURASSIC PARK: DOMINION have powered exhibitors to their highest-grossing quarter of the pandemic.
On the other hand, stock in streaming providers has been hit particularly hard, dropping steeply from the highs reached during the early days of the pandemic. Stocks in the four largest streaming providers – Netflix, Amazon, Disney, and Warner Bros – have all suffered drops of at least 35% over the first half of 2022. Netflix in particular, the world’s largest streamer and a pure-play streaming stock, has been savaged by investors, with its stock dropping by more than 70% from its high in November 2021.
The ever-confident leaders at Netflix are projecting an air of confidence in the face of this market turmoil. They are adopting incremental changes such as cracking down on password sharing and working to develop an ad-supported tier of service. They have not yet taken more radical steps such as cutting investments to create new content or releasing feature films to theatres. Perhaps, some of these more fundamental adjustments are being considered quietly, and may still be taken depending on actual results over the next 6-12 months.
See also: Netflix Says It’s Business as Usual. Is That Good Enough? (NY Times)