How does the World Cup impact sponsor stocks?
What happens to your stock price when you place your brand in front of 5 billion pairs of eyes? There’s no better time to find out than during a World Cup! Today, we’re looking at how the biggest tournament in the world can impact its sponsor’s stocks. Is it really worth it? After that, we’ll outline the top fundamental events to watch out for this week.
An ad frenzy
It’s projected that over 5 billion people will be tuning in to watch the World Cup in Qatar. You might even have one eye on one of the games right now (stick with us, the next 5 minutes of reading will be better than the football!).
That kind of audience sends the world’s biggest brands into a frenzy as they jostle for position, competing for the best ad space. Marketing rights comprised 26% of the entire revenue of the last World Cup in Russia.
Source: SP Global
An official sponsorship with FIFA can cost upwards of £100 million. So, which companies stand to score in 2022?
Which companies could benefit in Qatar?
Many of the official FIFA sponsors are not publicly traded, but there are 2 companies whose stocks may do well out of their sponsorship in Qatar.
Some of the biggest benefactors of World Cups are the kit makers themselves. Their logos are emblazoned on the teams training and match wear and close-ups are shown continually. The two biggest kit makers are Adidas and Nike.
#1 Adidas (ADS)
At this World Cup, Adidas are the kit creator for Wales, Argentina, Mexico, Spain, Germany, Japan, and Belgium — and this is perhaps more relevant than you know. In 2018, Adidas shares dropped 6% when the heavily favoured Germany (which was then also sponsored by Adidas) got knocked out early.
The stock might be a good opportunity to buy right now, especially if Spain, Argentina or Germany have anything to say about it. Adidas said it expects sales of about €400 million related to the World Cup. Which would equal about 2% of annual revenue.
#2 Nike (NKE)
Continuing that stat mentioned above, France (a Nike team) went on to win the 2018 World Cup. The company’s stock gained 4% immediately thereafter..
Nike is hedging their bets in 2022 it seems, currently sponsoring 13 nations in Qatar, including the Netherlands, England, USA, Saudi Arabia, Poland, France, Australia, Canada, Croatia, Brazil, Portugal, South Korea, and the host nation itself.
So far during the tournament, shares of Nike have risen under 1%, while Adidas is down 3.8%.
Nike will be hoping that odds-on favourite Brazil or England will lift the trophy and see that stock take an even bigger bump.
So, it does seem that there can be sizeable return on investment, if you manage to get into the elite club, of course. Just don’t mention any of this to Budweiser, okay?
Could Qatar Controversy Damage Sponsors?
Qatar remains a controversial choice for World Cup host. Many football fans pledged not to watch the World Cup in solidarity with the LGBTQ+ community and in support of womens rights and the migrants who lost their lives building the stadiums. According to a recent poll, six out of 10 people in the UK oppose Qatar hosting the World Cup over anti-gay laws, with 39% believing teams should not take part in the event. A boycott of sponsors can threaten a company’s reputation, especially by generating negative media coverage and ultimately impacting sales and stocks.
Are you trading World Cup stocks?
Are you trading any of the World Cup Stocks? Would you boycott any of the sponsors? Tweet us @_Contentworks and tell us what you think.
Top trading events week commencing 28.11.22
It’s going to be a pretty quiet week, but here are the hottest events for your trading calendar.
No major events are planned.
● Inflation Rate YoY Prel (NOV)
● CAD — GDP Growth Rate Annualised (Q3); GDP Growth Rate QoQ (Q3)
● USD — CB Consumer Confidence (NOV)
● CNY — NBS Manufacturing PMI (NOV)
● EUR — German Unemployment Change (NOV); German Unemployment Rate (NOV); Core Inflation Rate YoY Flash (NOV);
● USD — GDP Growth Rate QoQ 2nd Est (Q3); Fed Chair Powell Speech
● JPY — BoJ Kuroda Speech
● USD — Core PCE Price Index YoY (OCT); PCE Price Index YoY (OCT); ISM Manufacturing PMI (NOV)
● CAD — Employment Change (NOV); Unemployment Rate (NOV)
● USD — Non Farm Payrolls (NOV); Unemployment Rate (NOV)
Here at Contentworks we closely follow market movements and prep content that we think your traders would love to read. Let’s get you started right here.
The Contentworks team