The Olympics fever are finally back here again!
According to a study by the National Bureau of Economic Research, they found that stock markets in host countries particularly often show positive abnormal returns in the lead-up to the Olympics, reflecting increased economic activity and investor confidence.
The Grand Paris Express Project is a prime example, with infrastructure being built for the events that will substantially benefit the citizens and its own people even way after the Olympics ends eventually.
Major events such as the Olympics heightened consumer awareness and engagement particularly in sponsored business activities through athletes wearing logos on their shirt or rackets, or banners displaying across stadiums.
Here are the 3 stocks that are likely to go straight for the gold medal during the olympics:
1.) Comcast Corporation (“CMCSA”)
As the owner of NBCUniversal, which holds media rights to the Olympics, Comcast will benefit from extensive coverage and increased viewership during the Olympics event no doubt. This is the 18th time NBCUniversal will be a broadcaster of the games.
This year will be extra special however, as viewers can watch on both the television channels as well as the Peacock streaming service, which will in turn attract more viewers.
Attracting viewership and gaining new subscribers is an important metric for Comcast. Its media segment, which includes television and streaming on Peacock, increased 2.1% in the second quarter from the prior year.
Apart from viewership, Comcast is also likely to gain from substantial advertising revenue during this event.
Based on the last Tokyo Olympic event, NBCUniversal reported over $1 billion in national television advertising revenue, which gave them a nice boost to their brand exposure to the audience.
2.) Nike Inc (“NKE”) and Adidas AG (“ADDYY”)
The two leading sports retail players are dominating the sponsor for the athletes’ footwear and apparels.
When these athletes who compete in the Olympics wear their logos and products during high-profile events that are shown to billions of people in the world, it creates positive associations and visibility for the brands – leading to increased sales and consumer loyalty and engagements thereafter.
The emotional highs and lows of the Olympics create lasting memories for viewers, and brands that are prominently featured become part of those memories, fostering long-term loyalty.
The Olympics also tend to attract a younger audience, and strong visibility can help Nike and Adidas appeal to and capture the loyalty of younger consumers.
Their YTD performance though are two different tales altogether.
While Adidas has gained ~30% from the start of the year, Nike has lost ~30% in the opposite direction.
Nike is currently trading at a TTM P/E of 19.4x, but has guided for a weaker FY25 as it expects revenues to fall by mid single digits due to weaker spending from China.
3.) Draftkings Inc. (“DKNG”)
DraftKings is a major player in the online sports betting which stands to gain significantly from the Olympics through increased betting volume and awareness.
Major international events like the Olympics draw in both regular and casual bettors, significantly increasing the betting volume on DraftKings’ platform. It even allows the likes of placing a bet on events such as fencing, archery, and track and field – events that are likely to garner visitors’ interest apart from the usual soccer and basketball matches.
As part of its new acquisition strategy, DraftKings also run targeted marketing campaigns and promotions offering bonuses and free bets to new users who sign up during the Olympics.
Draftkings are currently trading at a below than average P/S of 4.5x.
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