Editor’s Note: As the COVID-19 pandemic continues to rage, businesses continue to struggle. Politics is dominating the global news, while things are getting grimmer in the market landscape.
As we’ve told you before, we believe that the recovery from the pandemic will take two tracks: one for companies that thrived during social distancing, the other for those that didn’t.
For example, we first wrote about movie theaters shutting down again back in October 2020 in the article below. And today, the movie theater business still checks all the boxes for an industry that won’t survive. Read on to find out how streaming services are continuing to scoop up major releases and sending them directly to people’s homes…
— Annie Stevenson, Managing Editor, American Investor Today
What would you think if you heard a company was closing every single one of its 500-plus locations nationwide?
You don’t have to be an expert to know that it’s probably headed for failure.
Well, that’s exactly what Regal Cinemas did in October. Owned by Cineworld Group, Regal is the second-largest cinema chain in the U.S.
It made the decision to shut down operations after several highly anticipated films postponed their releases — including the next James Bond film, No Time to Die.
But none of this should come as a surprise.
Not even James Bond can save the movie industry from the pandemic at this point.
Cineworld isn’t traded on the New York Stock Exchange, but you can see the movie theater fall in another titan’s market price: AMC Entertainment (NYSE: AMC). Take a look at its chart:
And it’s something Wall Street veteran and Alpha Investor Editor Charles Mizrahi predicted from the start of the new COVID-19 normal…
A New Business Landscape
You see, when Charles’ home city of New York started issuing stay-at-home orders, he saw the lights go out on Broadway … Times Square emptied of tourists … and Grand Central Station became a ghost town.
He knew the business landscape had now changed drastically … possibly for a long while.
So, he had to find out which businesses would thrive despite the pandemic. That would be the only way to still make money investing in the markets.
And with his 37 years of Wall Street experience, he figured it out by solving the problem in reverse. He thought about which businesses would definitely fail in the pandemic.
Over the phone, he told me about the three types of businesses he believed would tank:
- Ones needing foot traffic.
- Ones that didn’t provide essential products to keep their recurring customers.
- Ones that needed daily transactions to survive.
If we’d made a list of industries that fit these, movie theaters would have been at the top of that list. They need their customers’ foot traffic and purchases to stay alive. And movies weren’t a critical part of many people’s days to begin with.
With stay-at-home orders preventing people from leaving their homes or traveling, theaters saw their customer base and transactions dry up.
They were facing major headwinds from the very start. And Charles is still betting against them in the long run, too.
Instead, he’s turning to a growing $44 billion industry that’ll thrive as movie theaters become a thing of the past…
The Rise of Streaming
The fall of theaters has been a long time coming. And it started with the decline of cable. Nobody flips through the channels anymore.
We can watch what we want, when we want, wherever we want — even if that’s on our phones while working out on a Thursday morning.
And the pandemic has fueled that trend more than ever. Stuck at home all day, we’re bound to binge-watch a show or two.
Plus, most people right now are still reluctant to go back out even after the vaccine news.
Why go out and risk your health at a movie theater when you can stream your favorite films and shows right from the comfort of your own home?
That’s why at Alpha Investor, we see the streaming industry taking over in the years ahead. And we’re betting on a small number of companies to lead the way. In particular, we see streaming companies using the subscription model becoming the next wave of market dominators.
And it’s not just companies like Netflix. There are companies dominating the streaming market for more than just movies. They’re gathering subscribers in record numbers. In fact, one of our favorites beat its four-year subscriber target in just 10 months.
And as movie theaters continue to struggle, movie streamers will continue to prosper.
Those with subscription models will do even better.
We’ll continue to monitor this trend as it unfolds … and let you know our favorite companies to take advantage of it.
But if you want to get access to these names before our research ever appears in American Investor Today, you need a subscription to Alpha Investor.
This will be one of the next mega-trends in the market. . You don’t want to miss it.
Regards,
Managing Editor, Alpha Investor