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Broader markets, media stocks rally, but on uncertain ground


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Broader markets, media stocks rally, but on uncertain ground

This week saw the end of a volatile first quarter on the markets,and it was a bullish, if uncertain, finale.

As of late-day trading April 1, SNL Kagan's New Media and Media& Entertainment indexes gained well over 2% for the five trading days endingApril 1, as the S&P 500 put on about 1.7%.

For the full quarter, the S&P 500 climbed upward about 0.77%,but only after a massive decline in February. The index fell as much as 10.5% duringthat month, making the March 31 quarter the first since the Great Depression thatthe index ended the quarter in the black after falling over 10%, The Wall Street Journal reported.

It is difficult to say whether the rally in the second half ofthe quarter will have any stickiness. A market analyst told MarketWatchthat the economic data is still shaky and the upcoming earnings season could revealextended weakness on a strong U.S. dollar and low interest rates. Adding momentumto a bearish thesis, the Nikkei had a dismal start to the second quarter, postingits biggest decline in more than a month on April 1, down 3.5%.

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But for now, U.S. markets and several media stocks seemed somewhatinsulated from the naysayers, particularly some names in new media.

Yahoo! Inc.extended a strong rebound after plummeting through the first half of the quarter.The online advertiser was closing down almost 20% in mid-February.

The company's rebound came on the back of some reorganizationefforts and some serious M&A speculation. News broke in early February thatVerizon Communications Inc.was mulling a Yahoo acquisition.Then the search company started cuttingjobs. The board set up a committee to explore strategic alternatives, the activists began warming their engines, and more began showing in a merger.

All the speculation led to a big bounce back for the beleagueredsearch giant, and the week ending April 1 helped boost Yahoo's gains further.

The week's gains came as MicrosoftCorp. offered fundingfor Yahoo's potential suitors, looking to ensure a good partnership with the potentialbuyer of the company's core Web business and Asian assets, Re/code reported. Sourcesindicated that Yahoo is looking for $10 billion in a sale. Verizon, and AT&T Inc. are all reported in acquisition talks withYahoo, as well as several investment firms.

The company also set an April 11 deadline for bids, TheWall Street Journal reported March 28.

Yahoo shares traded up over 5.5% for the week ending April 1,as of midday trading.

In more traditional media movers, DISH Network Corp. bucked the upward trend during the weekto shed over 3%, as of late-day trading April 1.

The downward momentum comes as the low-frequency spectrum auctionlaunched March 29. Theauction includes an undisclosed slate of applicants, but DISH Network participatedin the forward auction.

Also during the week, the company locked horns with in a that could lead to more blackoutsfor the satellite cable provider. The deal (or lack thereof) would affect 48 markets,roughly 70 local stations across the country. The prior agreement with Media Generalexpired March 31. Media General began posting notices on its stations websites towarn viewers about a potential blackout.

During the week, DISH Networks managed to hammer out a new carriageagreement with , but could onlymuster an extension of talks with Media General.

Investors continued to be bearish on the name throughout theweek, despite even Jim Cramer of TheStreet urginga strong buy on the stock. Cramer noted that DISH Network owns a "huge amountof spectrum" and said it was "too well run, too smart" to sell. Headvised buying DISH Network on any weakness, even as TheStreet itself rates thestock as a "hold" with a sore of C.

Looking at other decliners for the week, internet radio companyPandora Media Inc. tankedduring the last days of March.

The company is fighting some serious negative headwinds as itsuser base refuses to grow. Seeking Alpha's George Kesarios opinedMarch 31 that if Pandora does not show growth in active listeners as of its nextquarterly report, shares could trade as low as $6, down from almost $9 where shareswere trading April 1.

Also, Pandora is showing little confidence in its strategic direction.The company is considering a saleof KXMZ-FM, the South Dakota broadcast radio station it bought last year to lockin lower royalty rates on its music catalog. Pandora told the FCC that it is reconsideringits broadcast presence, and asked to delay a shareholder vote on the strategy.

Also possibly weighing on the stock, the company said March 28that it brought in TimWestergren as CEO as Brian McAndrews steps down. Westergren was a founder of thecompany. Concurrent to his appointment, Pandora will also shuffle its managementstructure to help stimulate growth.

In general, investors did not like the flux they were feelingfrom the legacy streaming music company, and bailed almost 20% of Pandora's marketcap out of the boat in the six trading days ending April 1.

Other Internet names fared much better. Online real estate serviceZillow Group Inc., forinstance, showed strength throughout the week after some bullish analyst reportstrickled in. During the prior week, RBC Capital Markets revealeda survey that showed 40% of real estate agents boosting their Zillow spending, morethan the company's competitors. Further, agents who advertise on Zillow rose toa record high of 38%, scoring well with high-spending "super agents."

RBC Capital Markets raised its rating on Zillow to "outperform"and its price target to $34, Investor's Business Daily reported.

The company kept getting positive affirmation during the followingweek, ending with another upgrade from Goldman Sachs. That firm boostedits price target to $27 and maintained a "buy" rating on the stock, accordingto The Vista Voice.

Zillow drove upward throughout the week, leading to an end-of-the-weekselloff that left the company still in the black by about 4% as of late-day tradingApril 1.

WebMD Health a little boost from a leading index during the week, driving its shares higher.The S&P Dow Jones Indices announced that the name would jointhe S&P MidCap 400, replacing SunEdison on the list as trading enters the secondquarter.

WebMD shares were trading well over 6% for the week as of middayApril 1.

Lastly, what goes down must, or might, go up. managed to turn its fortunesaround after uncertainty in the consumer markets and a high-profile terrorist attackin Europe created an air of negativesentiment around travel companies.

The company closed the quarter with a strong finish, up over8% for the week ending April 1.