21st Century Fox: An Unfantastic Summer Spells Doom for FOXA


For some, summer is all about the three “B’s” — booze, bikinis and blockbusters. While the former pair were on full display across America’s sandy beaches, 21st Century Fox (FOXA) forgot to bring blockbusters to the party.

21st Century Fox: An Unfantastic Summer Spells Doom for FOXA

The ballyhooed Fantastic Four reboot (essentially 21st Century Fox’s answer to Mission: Impossible – Rogue Nationfell flat on its opening weekend against both revenue forecasts and critical reception.

Fantastic Four was supposed to bring in $40 million on its opening weekend, but instead had to settle for $26.2 million, ranking it among the lowest debuts for a major studio superhero production.

Widely blasted by critics, 21st Century Fox also suffered the ignominy of a grass-roots campaign urging the sale of the franchise back to Disney’s (DIS) Marvel. Rumors have Fox potentially scrapping a sequel.

The virtually universal panning of Fox’s marquee blockbuster couldn’t have come at a worse time for Fox, which just released its fourth-quarter earnings report on Aug. 5.

Despite FOXA stock exceeding earnings expectations from Wall Street, the markets took a dim view on the studio’s 4.7% year-over-year decline in revenue. Investors quickly voted with their wallets upon hearing the mixed report, dropping FOXA stock 7% against the prior session.

Fox typically does well in the markets following an earnings release, whether the company hits it out of the park or goes down swinging. In its last two misses — for Q4 FY2013 and Q1 FY2014 — shares still managed to climb an average of more than 4% two months after release. However, this trend was nixed when nine weeks after beating the Q3 FY2015 consensus, FOXA stock fell more than 3%.

21st Century Fox: An Unfantastic Summer Spells Doom for FOXA
Source: Source: JYE Financial, unless otherwise indicated

This sudden turn for the bearish may represent an unwanted paradigm shift for 21st Century Fox.

FOXA stock is down an ugly 21% YTD. Even more worrisome, FOXA really hasn’t moved much for almost two years, with shares down 14% against January 2014. If the long hand of the market wants a say in the matter, it better do so quickly.

Technically, 21st Century Fox investors have had two major hurdles: First, FOXA stock suffered two pronounced down-gap sessions to lead off the month of August. In a span of just three days, FOXA lost 13% of its value. Second, the response to the down gaps has been lethargic. Shares are only up a little more than 2% from the Aug. 6 session, which makes FOXA stock particularly vulnerable to another selloff.

Simply put, FOXA is well below its long-term horizontal support line of around $34, and recent fundamentals don’t inspire much confidence.

Unfortunately, 21st Century Fox committed the cardinal sin of launching a boring summer blockbuster. As a result, FOXA stock lost what potentially could have been a spark, and instead may have found itself in the early stages of a punishing meltdown.

As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.

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A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

Article printed from InvestorPlace Media, https://investorplace.com/2015/08/21st-century-fox-foxa-stock-disney/.

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