The 44 US media and technology stocks tracked by IHS Screen Digest decreased an average of 3.3% in November, a worse performance for the month than either the S&P 500 (-0.5%) or the NASDAQ (-2.4%). Only 19 of the issues we track rose in November (and those increased an average of only 1.7%) while 25 lost ground, decreasing an average of 8.7% during the month.
Analysis
While our Retail average wasn't the poorest performer during the month, it only fell 7.3% compared with a decline of 15.2% for Enabling Technology, it deepened its four-month losing streak in November, led downward by shares of players in the physical rental sector. But rentailers weren't the only companies at the bottom of the pile, even following the record consumer spending on both 'Black Friday' (November 25) and 'Cyber Monday' (November 28) - Amazon.com fell nearly 10% during the month to close at $192.29/share and Gamestop was right behind with a decline of 9.6% to end November at $23.12/sh. Wal-Mart (up 3.8% to $58.90/sh.) and Best Buy (up 3.3% to $27.09/sh.) led the lackluster small group of gainers.
Netflix continued its downward trajectory in November, closing the month 21.4% lower at $64.53/sh., following a spate of problems surrounding its attempts to transition from disc-by-mail market leader to streaming giant (see the November issue of Hollywood Aftermarket). Late in the month, the company announced it would raise an additional $400m to fund its growth - it had nearly that much in cash and short-term investments at the end of September but has acquired content obligations of up to $3.5bn. Few Wall Street analysts (and even fewer investors) are bullish on Netflix these days: most recently, Standard & Poors cut the company's rating to BB- on November 28, citing probable lower profitability due to rising content commitments and international expansion and uncertain domestic subscriber growth trends.
Redbox parent, Coinstar, was just behind Netflix, declining 10.6% to close the month at $42.69/sh. Late last month, the company announced its results for the third quarter of 2011, noting that Redbox year-to-date revenue had passed the $1bn mark and was on track to top $1.5bn by the end of the year. Coinstar shares trended downward for most of the month, reviving toward the end as JPMorgan gave it a boost by suggesting the stock was worth holding on to in the short term - the financial services company believes the kiosk rental business will reach saturation in 2012 (we also project slower growth in 2012 and beyond, see the November issue of Hollywood Aftermarket).
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