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Oscars Are Fun But Don't Expect Studios' Stocks to Rise

Stocks in this article: VIA FOXA TWX SNE DIS

Ahhhh Oscar season. I love Oscar season. Some of the greatest films in history are released during the months leading up the Oscars, and there are few things I love more than an amazing movie. There are some great films this year, with my favorite being the Dallas Buyers Club. Jared Leto and Matthew McConaughey were out of this world...

Last year, around this time I became curious as to whether an Oscar win affected a stock's price. Some of those results may surprise you...

This year, I decided to compile a chart of the past 10 years with the following pieces of data - Studio, winning picture, stock price before, stock price after, one day return, and 10 day return - to determine the impact on a movie studio's stock price after winning an Oscar.

I found this chart very interesting and at first, I didn't see any obvious correlation. That was a little disappointing because I was hoping to be able to find at least some relation between an Oscar win and a healthy increase in the stock price for the studio that produced it.


Then it occurred to me that the overall performance of the market would also have an impact on the studio's stock price, so I looked at the S&P 500 returns for the last 10 years and it all started to make more sense. For example, I was surprised when the stock price of Viacom (VIA), owner of the Paramount film studio, dropped 4.2% over the course of the ten trading days after winning the Oscar for No Country for Old Men back in 2008. After checking and seeing that the S&P 500 finished 2008 at a negative 38.49%, that move made more sense. My conclusion is that day trading the movie studio's stock that produces the Best Picture Oscar-award winning film is trickier than I had expected. Even when you take the overall market performance into consideration, the market reacts erratically to the studio's Oscar win. You may see compelling evidence otherwise, but for me, instead of trading the studio's stocks, I'm happy instead to root for all the amazing actors and actresses who are nominated for the 2014 Academy Awards. Here's a list of each film studio and how many nominations they had this year:

NOMINATIONS BY STUDIO AND DISTRIBUTOR(Not counting shorts categories)
Sony Pictures (includes Sony Pictures Classics) - 21¨
Warner Bros - 21
Paramount - 13¨
20th Century Fox (includes Fox Searchlight) - 11 
The Weinstein Company (including Radius-TWC) - 11¨
Universal (including Focus Features) - 10
Disney - 7
CBS Films - 2, Adopt Films - 1a¨,Drafthouse Films - 1a¨Enthuse Entertainment - 1, GKIDS - 1a¨, IFC Films - 1 Janus Films - 1 Magnolia Pictures - 1, Netflix - 1 Participant Media - 1 Strand Releasing - 1 Tribeca Film - 1, Worldview Entertainment - 1 Lionsgate/Roadside Attractions - 1

Here is a list of the films that were nominated for Best Picture in 2014 and the studio's stock symbol that produced that film. This year, all of the films nominated for Best Pictures are associated with a studio that has publicly traded stock.
American Hustle - Columbia Pictures (SNE)
Captain Phillips - Columbia Pictures (SNE)
Dallas Buyers Club - Universal Pictures (CMCSA)
Gravity - Warner Brothers (TWX)
Her - Warner Brothers (TWX)
Nebraska - Paramount (VIA)
Philomena - 20th Century Fox (NWS)
12 Years a Slave - Fox Searchlight Pictures (FOXA)
The Wolf of Wall Street - Paramount (VIA)

And the winner is... 12 Years a Slave.

Based on the empirical evidence you see here, how do you plan to trade 21st Century Fox (FOXA), owners of Fox Searchlight?

Many Happy Returns,
Rachel



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