Online entertainment industry performance and the Covid-19 pandemic

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School of Business | Bachelor's thesis
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Date

2024

Department

Rahoituksen laitos

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Mcode

Degree programme

Rahoitus

Language

en

Pages

23

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Abstract

In today’s world, people use online products and services more than ever, with the Covid-19 pandemic further accelerating digital transformation. As a result, video games, streaming services, and social media have all experienced huge growth and adoption. Bundling these business activities together, I examine the past returns of stocks in what I call the “online entertainment” industry to study their performance based on common risk factor models used in financial research. I con-struct portfolios of stocks in US exchanges, both equal- and value-weighted, to proxy for average returns and industry performance, respectively. To understand the effect of a primarily online-focused business orientation, I also create portfolios long in online entertainment, and short in more traditional entertainment industries that do not utilize the internet as heavily. Using a Covid-dummy, I study the effect of the covid-19 pandemic on the returns of all portfolios. I do not find evidence of positive abnormal returns on the online entertain-ment portfolio, but I find compelling, albeit lacking, evidence for positive ab-normal returns on the long-short portfolio. I do not find evidence of the Covid-19 having any systematic effect on returns of the portfolios. Overall, I suggest that the online entertainment industry could provide hedging power against future pandemics and requires further research using methodology more suitable for event studies.

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Thesis advisor

Kokkonen, Joni

Keywords

stock returns, online entertainment, Covid-19, digitalization

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https://urn.fi/URN:NBN:fi:aalto-202405193416

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