Blockbuster investing: When to buy stocks related to movie brands

With 'Barbie' packing theatres, investors may have already missed their chance to maximize returns from product manufacturer's shares.

Betting on potential returns from blockbuster movies is something of a niche investment but it can pay off if timed correctly.

While studios and others connected with a production, movie stars or movie distribution may be one way to invest in movies, there is another option that focuses on brands that are featured on screen.

The current hit movie “Barbie,” which grossed $377 million globally over its opening weekend, couldn’t be more tied to a brand, but how did the huge amount of hype surrounding the movie translate to the share price of Mattel, owner of the Barbie brand and manufacturer of its eponymous dolls?

An analysis from trading and investing platform eToro shows that those investors who want to gain from the blockbuster currently packing out theatres have probably already lost out on the biggest returns.

Looking at Refiniv data on the share prices of several companies whose products were featured in hit movies, the analysis reveals that the three months before release sees a bigger lift for share prices – 8% on average – while the three months after release only brings an average lift of 4.3%.

Of course, Mattel may be the exception given its share price has spiked 22% in the past three months.

WINNERS AND LOSERS

Product placement in other movies has been less successful with 2016’s “Steve Jobs” movie handing Apple an 18% rise in share price ahead of release and a sharp slowdown to just 3% in the three months post-release.

Audi (owned by Volkswagen) saw a 14% share price jump in the build up to 2008’s “Iron Man,” a film which featured the car brand prominently. Following the movie’s launch, the share price fell away by 8%.

Meanwhile, James Bond movie “No Time To Die” gave Aston Martin only a 2% prerelease gain and a 32% drop afterwards in 2021.

And Nike failed to gain at all from the release of Michael Jordan-inspired movie “Air” earlier this year. The company’s share price was down 1% in the three months before release and 14% afterwards.

It should be noted that other factors may have been in play that are unrelated to the movie releases that impacted share prices either positively or negatively.

“Movie-goer anticipation and studios’ big marketing dollars have a clear positive spill-over to the share prices of the companies most associated with these movies, with nine of the ten stocks analyzed rising ahead of the movie premiere by an average of 8%,” said Ben Laidler, eToro global markets strategist. “But this share price boost seems to be temporary as five of the ten saw their prices fall, down an average of 4.3%, with a post-premiere hangover.”