Sony’s Stock Revival Will Take You Back… to When Kevin McCallister Outsmarted the Wet Bandits

It’s been a hot minute since Sony was this hot on the stock market. How hot, you ask? Last time the company hit these heights, Kevin McCallister was blasting “Rockin’ Around the Christmas Tree” on his Walkman to scare off the wet bandits. 

Now, after three decades of wandering in the consumer-electronics desert, Sony’s stock is breaking records, thanks to its transformation into an all inclusive entertainment powerhouse.

Let’s take it back to the beginning. Sony launched in 1946 as Tokyo Telecommunications Engineering Corporation (rolls right off the tongue, huh?). By the ’80s, it was the cool kid of consumer tech, giving us gems like the Trinitron TV, the Walkman, and, of course, the PlayStation. Owning a Sony product meant you had taste.

But starting in the 2000s, it fell behind… missing the smartphone revolution, losing its edge in TVs, and facing intense competition in almost every hardware category. By 2011, Sony had racked up $6 billion in annual losses. Investors left it for dead, and its stock spent the next two decades flopping around like Lebron trying to draw a foul. 

Well here’s a bit of nostalgia for you old heads. Sony’s stock is on fire. Shares in Japan recently closed at their highest since 2000. Over the past month alone, the stock has jumped 18%, outpacing entertainment juggernauts like Disney and Netflix. Since 2021, the stock has surged more than 70%, and analysts project even more growth. Macquarie expects Sony to report record operating profits for its fiscal year ending in March 2024, driven by gaming and licensing deals.

So, what’s behind the comeback? Simple: Sony ditched its hardware obsession and went all-in on entertainment. A decade ago, gaming, music, and movies made up just 30% of its revenue. Now it’s 60% (and, shocker, profitable). For the quarter ending September 2023, Sony’s net profit soared 69% to $2.24 billion, mostly thanks to its gaming empire.

Speaking of gaming, the PlayStation 5 is crushing it. With lifetime sales over 40 million units, it’s outselling  Microsoft’s Xbox Series X and Nintendo’s Switch like it’s playing on easy mode. But Sony’s not just sitting on its console throne. It’s branching into PC gaming and publishing smash hits like Helldivers 2, which moved 12 million copies in just three months.

Sony’s playing the long game with content, and it’s not messing around. Dropping a $3.6 billion to snag Bungie (the brains behind Destiny) back in 2022? Genius. And let’s not forget the 2021 pickup of Crunchyroll (not the sushi, but still smart). While they might look like vanity purchases… they’re tactical moves to lock horns with Disney, Netflix, and Amazon.

And don’t even get me started on licensing. The Last of Us went from a killer video game to an Emmy-winning TV show on HBO, and Sony’s just getting warmed up. Next up: a big-screen adaptation of God of War and, if the rumors are true, a potential acquisition of Kadokawa (the folks behind Elden Ring).

Meanwhile, Sony’s music division continues to print money. After acquiring EMI in 2018, Sony became the world’s largest music publisher, representing artists from Beyoncé to Harry Styles. Its image sensors division (used by tech giants like Apple) adds another reliable revenue stream.

It’s pretty obvious Sony has reinvented itself, pivoting from a hardware-first company to a full-blown entertainment titan. Its stock is riding high, its gaming division is rollin, and its content strategy is pulling in new fans (and investors). Sure, it took years of “substantial pain” (as Macquarie analyst Damian Thong so eloquently puts it), but Sony’s comeback is proof that sometimes, you’ve gotta lose yourself to find your way back to the top.

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Stock.News has positions in Sony, Apple, Microsoft, Warner Brothers, Disney, Amazon, and Netflix mentioned in article.