Sony (SONY) is a name synonymous with ’80s electronics. Once known for its iconic hardware, such as the Walkman, Trinitron TV, compact disc, VCR, and much more, the company has gone missing from the public’s eye in the last few years. In the early 2000s, Sony had a rough time as the company saw its revenues hit a wall. Things looked somewhat bleak as Sony struggled to keep up with the competition in the electronics market. However, since then, Sony has shifted its focus and enhanced its content rather than finding another technological jackpot.
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It is safe to say that the move has paid off big time. It’s been an ongoing shift for over a decade, yielding handsomely for the company and its investors. In the last year, SONY stock has risen over 17%; if we go back to five years, the percentage increases to over 58%. However, if we examine the stock’s performance in the last 10 years, the numbers are much more impressive, with over a 423% increase. Moreover, SONY has missed the market estimated only once in the last 12 quarters, making its investors pretty satisfied.
In this piece, we’ll explore Sony’s strategic moves toward becoming a music, TV, film, and gaming content giant.
Acquisitions and Revenue Increase
Sony’s comeback story is all about smart acquisitions and a shift to content creation. Over the past decade, Sony has snapped up some big names to boost its content game. It acquired EMI Music Publishing in 2018, making it the world’s largest music publisher, and added Crunchyroll, a top anime streaming service, to its portfolio in 2021. Just recently, Sony upped its stake in Kadokawa, a major Japanese publisher, to 10% for $320 million. These moves have seriously energized Sony’s revenue from entertainment. Last fiscal year, its gaming and network services division alone pulled in $25 billion, with music and pictures adding another $8.5 billion and $10 billion, respectively.
This shift toward content suppliers has diversified Sony’s income and made it a big entertainment player. However, one issue arises when looking at industry giants such as Netflix (NFLX), Apple (AAPL), or Amazon (AMZN); all of them have their own streaming platforms as a steady source of income, a platform that Sony does not have as of now, forcing it to always search for a home for its content.
AI and Intellectual Property Rights
Of course, it’s not all smooth sailing for Sony, who is dealing with some headaches regarding AI and intellectual property rights. The rise of AI-generated content has led to legal battles over copyright issues. In 2024, Sony and other music giants sued AI companies for using their music without proper licenses. Sony Music Group has warned over 700 companies against using its content to train AI models without permission. These legal fights highlight the tricky nature of protecting IP in the digital age and the need for updated rules to handle AI-generated stuff. How Sony handles these challenges will be key to its continued success.
TipRanks’ Smart Score and Investor Outlook
Investors are taking note of Sony’s smart moves. On TipRanks, Sony has a perfect Smart Score of 10, suggesting it will likely outperform the market in the near term. The stock possesses strong technical indicators with its momentum back to positive vibes. Also, the company’s valuation is fairly valued, with a P/S of 1.28, a bit more than the industry’s median of 0.96. Sony’s focus on content, as well as its proactive approach to obstacles, make it a solid bet for investors. As Sony continues to leverage its vast IP portfolio and adapt to the digital content landscape, it looks set for ongoing growth and success in the entertainment industry.
Is SONY Stock a Buy or a Sell?
If we turn to Wall Street analysts, Sony is considered a Moderate Buy based on two Buy ratings. The average price target for SONY stock is $24, implying a 12.57% upside potential.
Sony’s Back
If you lived during the ’70s and ’80s, Sony was synonymous with electronics, whether it was Walkman, Portable Discman, Video Players, or PlayStation in the mid-’90s. In recent years, after a continued decline, the company has shifted its focus to content, and it has paid dividends, with SONY becoming one of the leading forces in content creation, which has evolved into a key revenue source. The company’s path forward is clear, but it should be stressed that unlike other notable players in content creation, such as Netflix (NFLX), it doesn’t own a streaming service, which could hinder its near-term prospects.
