Among the many industries that the coronavirus has changed forever is the entertainment industry. While streaming companies are still riding high off the benefits of increased demand for at-home entertainment, many entertainment producers like Lions Gate Entertainment (LGF.A) (LGF.B) are still facing an uncertain road ahead. In a nutshell, Lions Gate still hasn’t driven a meaningful recovery in its movie business, and its upcoming pipeline doesn’t look that promising either. Meanwhile, STARZ – the company’s in-house streaming service, which is a distant fifth or sixth-place competitor in the now heavily crowded streaming service space, has actually been bleeding subscribers. In my view, this doesn’t set the stage well for Lions Gate in 2022.
Though I was previously bullish on Lions Gate earlier this year, I’m now revising my opinion on the stock to neutral. In my view, the risks and the rewards are well-balanced here, and Lions Gate is no longer a viable alternative to simply buying a market index fund.