Most entertainment stocks have been doing great this year, especially after the COVID-19 crisis which initiated lockdowns. People were stuck inside their homes for months, and the only way they could keep themselves busy was by investing in entertainment stocks. From incredible video streaming services to hundreds of television channels to choose from, every person was well-taken care of. While some entertainment stocks have been doing incredibly good this year, others have been adversely affected, especially those involved in outdoor activities like sports and film production.
Expected outlook for entertainment stocks in 2021
Despite all the negative impacts of the pandemic, fixed broadband is anticipated to reach over one billion households towards the end of this year and the beginning of 2021. There will be a high rate of consumption, especially because of the 5G enabled in smartphones. Those interested investors will keep an eye on the latest analyst price targets.
Reasons for the losses in entertainment stocks
Canceled events or performances have led to a drastic fall in revenues for media platforms that advertises them. This cancellation of events has led to a loss in sponsorship deals and advertising events, resulting in a reduction in revenues.
Low spending outside homes
With the prevalence of the COVID-19 pandemic in almost all nations worldwide, people have spent the better part of their 2020 inside the house. Besides, the limits imposed on social gatherings have also led to minimal attendance in entertainment spots like cinema halls, hotels, and clubs. This has led to a reduction in spending on such events. Moreover, this low spending harmed new product brands trying to access the market through media platforms like televisions.
An initial public offering (IPO) typically refers to a situation where a privately owned company makes a decision to go public by availing its shares to sophisticated investors through the stock market. These shares can be new or perhaps existing shares in the company. When a business decides to go public, numerous modifications will be standards of accountability, such as excellent financial discipline, great standards of accountability, and implementation of new strategic policies. Before going public in the stock market, there are five essential things that a business needs to have, as discussed below.
An impeccable revenue scope
If your business is seeking to go public, you need to prove to these high profile investors that it can grow rapidly. Normally, it is hard for a business to depict high growth rates when large numbers are involved, meaning that if the business is rapidly growing and is yielding high revenue, there is a high probability that the business will have a stable growth rate. According to public investors, good revenue should be approximately $100 million. However, this is just mere speculation because it means that the business has a clear vision to achieve $ 1 billion in revenue after a few years. Most public investors believe that past performance is a good indicator of how your business will perform in the future. As a business plan to go public, you need to have past successful records for your business.
The business should be profitable
One major ultimate goal of both private and public companies is to make a profit. However, many businesses that are planning to go public usually start making profits during the maturity stage. Profitability can be measured differently depending on the types of business and stage of maturity. Many public investors put much attention on net income, especially for hardware and internet business, free cash flow, and EBITDA.
Market size
Before deciding to go public, it is important to ensure that your business has a large market opportunity because this is one aspect that public investors usually look for. According to most public investors, the total addressable market should be large, relevant, and proven.
Products
Generally, public investors are always looking to invest in businesses that have a diverse product range so that they can make enormous returns. If you are about to make your business go public, make sure that you at least deal with one product, although you plan to invest in other products as the business grows.
When a business goes public, there are various benefits that it will receive, and some of them include improved acquisition capabilities, liquidity for employees, and increased capital.