What happened

Shares of Roku (ROKU 0.05%), Discovery (DISCK), and AMC Networks (AMCX -4.75%), a collection of well-known media and streaming stocks, jumped 8%, 11%, and 14% Tuesday, respectively, as the broader markets logged huge gains Tuesday -- the Dow posted its best day since 1933. 

So what

Despite the significant rebound Tuesday, stocks have still plunged over the past couple of months.

^SPX Chart

^SPX data by YCharts.

As the coronavirus spreads and more COVID-19 cases come to light, nearly all companies will feel a negative economic impact. Media companies, however, have declined mostly in line with broader markets and haven't been hit nearly as hard as retailers, transportation stocks, or major manufacturers, among other industries. But not all media companies are created equal, and not all media stocks will respond to the coronavirus outbreak in the same fashion. Roku, for instance, could arguably stand to benefit as more people are stuck at home, which would boost viewing hours, active accounts, and ad revenue. Further, Roku could stand to benefit even more if live sports and other events move from suspension to cancellation, tempting consumers to cut the cord and seek alternatives such as new streaming content. Roku isn't invincible, as COVID-19 and social distancing could impact the content creators it relies on to bolster its service offerings.

A remote and multiple streaming content options.

Image source: Getty Images.

For the most part, media companies such as Discovery and AMC Networks should feel less negative impact during social distancing as they benefit from more consumer viewing hours in general, but also because those two companies don't depend on live sports content. Discovery's HGTV, Food Network, and TLC, among others, and AMC's BBC America, IFC, and SundanceTV, also among others, offer consumers an alternative to fill the current void of no live sports. It is possible media companies could face a slowdown in content creation, and thus a shortage of new programming in the future, but that impact is yet to be seen. 

Now what

Ultimately, when it comes to understanding how media stocks react to COVID-19, it really depends on the consumer: will cord cutting increase if live sports is suspended for an extended period of time?  Will consumers find new channels that were previously overlooked? Or will consumers simply add additional services provided by streaming services? It's questions like these that make investing in stocks challenging, and finding the best stocks is even more difficult, especially in uncertain times such as now.

The truth is simple: we don't know how drastic the economic impact from COVID-19 coronavirus will be, and we don't know how long its impact will linger. And while history has proven broader markets will eventually rebound, it's also true not all stocks will recover from this downturn. Savvy investors have an opportunity, and an obligation, to check the balance sheets of their companies and understand if they can weather the storm, and to look for new companies trading at a discount that are equally equipped to thrive once this outbreak is under control.