Sports stocks fell for the third month in a row as the JohnVallStreet sports stock index could not withstand the broad bear market. The Sports The index fell about 3% and ended at its lowest level in 19 months, but saw bright spots in video game publishers, broadcast networks and VVE.
Paramount (PARA) topped the 40-component sports index with an 18% increase in May, suggesting there is still one media power bigger than the Super Bowl: Tom Cruise. Paramount, formerly ViacomCBS, started the month by reporting a 6% drop in revenue of its largest segment, TV media, because it did not broadcast the Super Bowl this year, after earning $ 545 million from it last year. The decline has exacerbated the challenges facing traditional media - part of the reason the company has changed its name and highlights its streaming platform, which includes a wide range of sports content. Blockbuster opening Cruise Top Gun: Maverick, distributed by Paramount, raised shares by the end of the month, and the film raised $ 248 million by the middle of the opening for Remembrance Day. Fellow broadcasters NektStar Media (NKSST, increase of 11%) i Sinclair Broadcasting (SBGI, 10% increase) also rose on the JohnVallStreet index this month.
Electronic Arts (EA) was the second best player of the month, with almost 18%, although it announced that its licensing agreement with FIFA would expire. FIFA football companies and Apek Legends, a favorite among sports competitors, both recorded a record engagement in the first half of the year, according to a report by Credit Suisse analysts. Although EA will no longer be able to label its football game as FIFA or represent the World Cup in games, the company still has licensing agreements with major football leagues as well as players and will save perhaps $ 180 million in annual fees for the global football body. Other video game manufacturers, Take two (TTVO, 4% increase) i Activision (ATVI, 3% growth) were also among the 11 winners of the sports index in May.
Another significant winner was World Wrestling Entertainment (VVE), which rose 14% on signs that stream-first’s strategy is attracting more viewers and laying the groundwork for more frequent media rights sales. VrestleMania 38, the latest version of the annual VVE exhibition, was the second most watched program ever at Peacock, a streaming service from Comcast (CMCSA, 11% increase). According to VVE, he was only behind the 2022 Super Bowl.
For most of the 40 stocks at the JohnWall Street Sports Stock Index, May was another month of decline in the bear race it experienced Sports the index retreated from a high of 1,763 in November to 1,185 yesterday. Sports betting stocks continue to struggle with declining enthusiasm to open up the North American market. Nine components of the index lost more than 10% in May, including the Betway operator Super Group (SGHC, 27% drop), Sport radar (WED, 25% drop), Caesar Fun (CZR, decrease of 24%), Genius Sports (GENI, 20% drop) and sports parent Barstool Penn National Gaming (PENN, down 13%). The cost of acquiring customers and various rights at the data and state level still scares Wall Street.
“Many of these operators facing the United States currently have significant spending, which is alarming, especially due to the closure of funding sources and the tightening / dislocation of the debt market,” Gambling.com co-founder and CEO Charles Gillespie said in an email. Gambling.com (GAMB, down 2%) is not part of the sports stock index, but owns Bookies.com and Rotovire, both of which have strong exposure to sports betting. “Although I believe that the core business of these gambling operators has a brilliant unit economy and is very profitable, the pace and scope of the introduction of regulated online gambling in the United States is breathtaking and requires huge investments in starting each new state under balance sheet pressure.”
The broader bear stock market also did not help sports betting stocks, as fears of inflation led investors to recalculate what the fair value is for future growth. However, stocks at the end of the month in the broad market suggest that the market could be depleted and look at growth stocks again. The S&P 500 achieved the lowest growth in May and fell by about 13% in 2022. The sports stock index fell by 22% compared to that.
“I don’t think investors are particularly negative about online gambling stocks; “It’s more like investors are negative about a certain category of technology-driven, unprofitable, high-growth stocks — which overlaps with online gambling,” Gillespie said. “I believe that the power of online gambling cash flow, on a large scale, will be impossible for investors to ignore.”
Sportico’s The JohnVallStreet Sports Stock Index should reflect the state of the sports business across 40 companies traded in the U.S. equally weighted. To be included in the benchmark, stocks must be traded in sufficient volume on the U.S. stock exchange and have a minimum market capitalization of $ 50 million. Companies that do not meet the requirements, experience a significant corporate event (consider: bankruptcy, sales) or turn to a strategy away from professional sports can be excluded from the index. The index is rebalanced quarterly.