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Streamers and broadcasters led the Sportico Sports Stock Index higher in October, as a full slate of programming helped the sports business outperform the broad market in the month.
The Sportico index climbed about 1% in October to close at 1,269, better than the S&P 500, which dropped in the month due to concerns about large tech companies’ performance. Sports stocks are up more than 10% year-to-date, putting the index at its highest mark since July last year.
Sports-centric streaming bundler Fubo (FUBO) paced the field in October, rallying 23% in the month. Fubo tends to see an uptick in subscribers during periods of highly desirable sporting events and the heart of NFL season, and the sports equinox likely has traders betting the company’s strides in adding subscribers will continue. The company also announced a collaboration with The Athletic for new products and features on both platforms and moved toward providing some sports channels available for subscription without joining Fubo’s base package. The first channels offered a la carte include NBA Season Pass and FanDuel Sports Network (the current name of Diamond Sports’ RSNs). Fubo will report quarterly earnings later Friday morning. Analysts expect sales of $377 million and a per share loss of 12 cents.
Diamond’s owner (for the moment) Sinclair Inc. (SBGI) posted the second-best month, rising 13%. Sinclair is the largest owner of local affiliates of Fox (FOX, up slightly), Comcast’s NBC (CMCSA, up 5%), Paramount’s CBS (PARA, up 3%) and Disney’s ABC (DIS, up slightly). Sinclair’s equity ownership of Diamond Sports is going to be wiped out in the pending bankruptcy reorganization, a move that has been welcomed on Wall Street because of the heavy debt Sinclair piled onto the RSN business it unloads on its new owners. Sinclair will continue to own the Tennis Channel and stakes in Marquee Sports and the YES Network. Strong sports programming and the stretch run of election season both likely were strong for Sinclair’s advertising business in October, as well as for another large local affiliate owner, Nexstar Media Group (NXST), which was up 6% in the month.
Overall, 23 of the Sportico Sports Stock Index components rose in the month, with other big gainers including Betway parent Super Group (SGHC, up 13%), sporting goods manufacturer Amer Sports (AS, up 12%) and ticket reseller Vivid Seats (SEAT, up 10%). That left 17 stocks as decliners in the period, led downward by Nike (NKE).
Nike lost 13% of its value in October, closing at $77.11. “We say Just Don’t Buy It with NKE stock,” Jefferies & Co. analyst Randal Konik wrote in a research note last week. “Consumers are discovering new brands faster than ever and choosing newness, which tends to fragment share. This upends Nike’s playbook of buying up all the best athletes and teams to dominate mindshare and, therefore, market share.”
Nike’s earnings fell 26% in its most recent quarter, with a new deal to sponsor NBA and WNBA jerseys last month barely pausing the stock’s push downward. Nike shares have fallen nine of the past 11 trading days.
Other shoemakers, On Holdings (ONON, down 5%) and Under Armour (UAA, down 4%) also fell in the month.
The Sportico Sports Stock Index is a basket of 40 stocks that rely on sports for a significant part of their growth. The index includes sports organizations like Madison Square Garden Sports (MSGS, up 7%), sports wagering businesses including DraftKings (DKNG, down 10%) and video game publishers like Electronic Arts (EA, up 5%). To be included in the Sportico index, stocks must be traded in sufficient volume on a U.S. exchange and have a market capitalization of at least $50 million. The index is equal weighted, meaning each stock begins each quarter at 2.5% of the total index and then is rebalanced three months later. It debuted at 1,000 in August 2020.
