That's entertainment

Morgan Stanley & Co.’s expectations for a mostly rangebound stock market early this year has led them to focus on potential opportunities in certain sectors and market factors, including areas of the market with strong earnings revisions: financials, media and entertainment, software over semiconductors, and consumer services over goods.¹

Of those groups, media and entertainment may have one of the lower profiles, perhaps because it casts such a wide net—everything from tech stocks like Meta (META) to social media companies like Reddit (RDDT).

Those aren’t necessarily the types of companies the average trader would categorize as “entertainment” providers. The chart below shows four stocks they probably would—Netflix (NFLX), Disney (DIS), Warner Brothers Discovery (WBD), and LiveNation (LYV)—along with the S&P 500 (SPX):

Measuring from the October 2022 bear-market lows, it appears to be a picture of an industry that consists of “NFLX and everything else,” although this isn’t the case. Aside from the reality that this is simply a random handful of well-known entertainment companies, it should be noted that LYV doubled during this period, outperforming the SPX by 30 percentage points.

A snapshot of the year-to-date price action shows some of the trends from the first chart extending and others potentially evolving. As of Thursday morning, NFLX was still strong—far ahead of the SPX—but LYV had actually pulled slightly ahead of it. Meanwhile, WBD’s recent upturn had it neck and neck with the index, while DIS trailed the field:

LiveNation’s recent performance may be worth noting in light of a recent Morgan Stanley & Co. research survey, which found “fundamental” outperformance of music and live entertainment in the larger media/entertainment arena. The analysts noted the trends showing increased attendance of live entertainment events—60% of respondents attended an event in the past year, up from roughly 45% two years ago—was poised to continue.² LiveNation, which released earnings after yesterday’s close, was one of three stocks the analysts cited for possible outperformance.

Trends can always turn on a dime, but given the larger factors that have been hemming in the major indexes for more than two months, traders may be taking increased note of potential opportunities in specific sectors and stocks.

Note: Warner Brothers Discover (WBD) is currently scheduled to release earnings on February 27.

Market Mover Update: It’s been almost two weeks since FormFactor (FORM) recouped most of a 20% intraday sell-off, but as of Thursday the stock was still around 2% below its February 6 close (see “When a reversal reverses”).

Nearly a month after a large trader possibly opened a 12,500-contract straddle in Williams Companies’ (WMB) April options, on Thursday LiveAction scans highlighted a 12,700-contract trade in the April $60 calls (see “Taking a position on volatility”).

EQT (EQT) pulled back on Thursday after hitting its highest level in more than a decade on Wednesday (see “Fueling the AI story”).

Today’s numbers include (all times ET): existing home sales (10 a.m.), consumer sentiment (10 a.m.).

Today’s earnings include: Brady (BRC), United States Cellular (USM), Hawaiian Electric (HE).

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¹ MorganStanley.com. Finding Opportunity in an Uncertain U.S. Equity Market. 2/18/25.
² MorganStanley.com. 11th Annual Audio Entertainment Survey—Don't Stop Me Now. 2/18/25.