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Why Roku, Live Nation, and Sirius XM Stock Fell on Thursday

By Anders Bylund - Mar 13, 2020 at 12:50PM

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The coronavirus pandemic packed a punch on Thursday, smacking down these entertainment stocks whether or not they deserved to fall.

What happened

The entertainment sector did not fare well on Thursday amid a broad market decline triggered by the novel coronavirus. Shares of media-streaming technology expert Roku (ROKU -5.71%) closed 13% lower. Events arranger and Ticketmaster parent Live Nation Entertainment (LYV -1.69%) closed 13.8% lower, having recovered from an even sharper 24% plunge earlier in the day. Satellite and streaming radio veteran Sirius XM Holdings (SIRI 0.33%) ended the day at an 8.1% drop, having fallen as much as 12.7% earlier.

So what

Investors wore their nerves on their sleeves on Thursday as the COVID-19 disease infected more than 130,000 people worldwide, taking nearly 4,000 lives along the way. The president gave a speech on the government's handling of the virus on Wednesday evening, but that presentation only served to drive stocks lower as the speech was delivered. On Thursday, stocks felt the full brunt of the ham-fisted coronavirus response.

A richly valued technology name, Roku took a haircut as investors abandoned risky stocks in a panicked search for safer asset classes such as bonds or precious metals. Sirius was slightly less vulnerable to that effect thanks to a moderate valuation of 18 times trailing earnings or 18 times free cash flows. Live Nation, on the other hand, paired a sky-high valuation with a direct impact from the virus: The company has suspended all of the concert tours it manages through the month of March. The suspension might last longer if the virus fears hang around for a longer time.

Drawing of a man running from a barrage of virus proteins, carrying a large piggy bank on his back with a trail of coins falling out behind him.

Image source: Getty Images.

Now what

Live Nation probably deserved a haircut this week, because the virus damage on its business model is both undeniable and significant. One might think that media-streaming specialists like Sirius XM and Roku would benefit from the virus scare, as consumers around America and other countries find themselves staying away from public gatherings. Podcasts and streaming video services come in handy for filling the time spent locked in at home, after all. But the market panic pushed aside all such voices of reason, punishing Roku and Sirius just for being publicly traded stocks at a difficult time.

Rather than following the stampede toward the exits, you should probably pick up shares of these fantastic stocks on the cheap right now. Fellow Fool Rick Munarriz expects Sirius to come back swinging when the COVID-19 panic has faded. Danny Vena says that Roku looks like a solid buy at the moment, and I will second that thought. Roku found its way into my own investment portfolio for the first time on Tuesday, and the stock is only more attractive at even lower prices.

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Stocks Mentioned

Sirius XM Holdings Inc. Stock Quote
Sirius XM Holdings Inc.
$6.13 (0.33%) $0.02
Live Nation Entertainment, Inc. Stock Quote
Live Nation Entertainment, Inc.
$82.58 (-1.69%) $-1.42
Roku Stock Quote
$82.14 (-5.71%) $-4.97

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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