The Internet's Next Victim...

Last week Dick's Sporting Good's stock (DKS) got clobbered for a 21% haircut. The stock is down close to 50% this year. They came up short on earnings expectations and reported underwhelming same store growth. Just another brick and mortar retailer falling victim to the massive shift towards online shopping or what some are calling the "Amazon Effect".

 

It seems that no retailer is immune and made me wonder what other industry(s) could be next to feel the pain?

 

I recently downgraded my cable subscription because I've been spending more time on Netflix and YouTube. It made me think about the last time I went to a movie? It's been quite a while and apparently I'm not alone. Check out this google search...

 

 

It's possible that my age makes me clueless and going to a movie is still popular with other generations. I haven't gone enough to make an informed decision. However, I do know that the associated stocks involved in this business aren't looking so hot. 

 

The chart below shows what I'm talking about as most of these stocks look like they've topped (failed to make new highs and are now rolling over).

 

It's a potential trend worth paying attention to as it could affect your portfolio if you were thinking of buying one of these names on weakness. It's also a concern for real estate companies that have movie theatres in their tenant mix.

 

AMC Entertainment Holdings Inc. (AMC), Imax Corp. (IMAX) and Regal Entertainment Group (RGC) have been the weakest but Canada's largest movie theatre operator Cineplex (CGX.TO) isn't far behind. The stock is down 28% over the last 4 months after missing profit estimates and reporting a decline in attendance.

 


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