Barbie Barbie Barbie, that is what everyone has been talking about this past week.
How as this cultural phenomenon impacted the financial markets?
It the past a few economists have pointed to the sold-old concerts of top artists like Beyoncé and Taylor Swift as catalysts of rising inflation in countries across at least two continents.
This gives rise to the question of whether developments in pop culture have the same ability to affect movements in financial markets.
If anything, the recent box office release of the Barbie movie provides a resounding ‘yes,’ and is indicative of the impact the entertainment industry has on market sentiment and investor behaviour.
Commenting on this is Kamogelo Mosime, Partnership Manager at Tickmill, who says that “the influence of pop culture on financial markets is a fascinating aspect of modern-day investing. The material effects of this can be seen in the ‘Barbie mania’ that has hit the global stock market, with shares in Mattel surging by 1.8% over the past month. Stakeholders along the rest of the entertainment value chain have also seen positive results, with IMAX seeing its stock value rise by 2.9% – a phenomenon that could be attributed to the ubiquity of the Barbie movie.”
Ahead of the release of the Barbie movie, analysts forecasted that Mattel’s stock would see a significant upsurge in value, with estimates predicting an opening weekend of between $90 million and $100 million and a worldwide gross of between $450 million and $550 million.
The movie’s success was also expected to drive up the demand for Barbie dolls and related merchandise, with predictions that Mattel’s overall profit would increase by at least 10% as a result.
In the lead-up to the release of the movie, Mattel succeeded in capitalising on the hype by entering into strategic partnerships with several manufacturers and merchandisers. Outlets like Gap and Forever 21 were among the list of brands who received licenses to produce Barbie-branded apparel.
The subsequent increase in the value of Mattel shares has been linked to positive investor sentiment ahead of the launch of the movie and the implications for Mattel’s revenue and growth prospects. With Mattel now having outperformed its main competitor, Hasbro, all indicators suggest that this confidence was well placed, with shareholders looking to rake in the dividends.
Elaborating on how these kinds of factors play out on financial markets, Mosime argues that pop culture phenomena can significantly affect brand perception. In the case of Barbie, the cultural significance of the movie, as well as its alignment with the global zeitgeist has had a positive impact on how people perceive the brand and what it represents.
Ultimately, better brand perception and positive sentiment could translate into higher stock prices, with investors forecasting an increase in sales and profits. The Barbie movie’s mass-scale popularity has also influenced consumer spending and the demand for Barbie-related products, leading to higher revenue for Mattel.
The effects of this are likely to affect other entertainment-related establishments with companies like IMAX also standing to benefit from increased ticket sales. Further to this, the potential for sector-specific impacts is also highly likely. Providing a similar example, Mosime explains that the success of a superhero movie might influence comic book publishers or toy companies that produce related merchandise.
Furthermore, pop culture trends can also lead investors to seek out investment opportunities related to those trends. Companies associated with popular movies, TV shows, or cultural phenomena may experience increased attention and demand from investors looking to capitalise on the trend's success.
Pop culture-driven events, therefore, have the potential to create short-term market volatility as investors react to news and trends. A case in point is the recent 33% increase in AMC Entertainment Holdings' stock value after a judge rejected a settlement proposal – a clear demonstration of how sentiment and market dynamics can change based on external factors.
“The intersection of pop culture events with market developments can create both opportunities and risks for investors. Overall, the influence of pop culture on the markets demonstrates the interconnectedness of various sectors and how consumer behavior, sentiment, and trends can shape investment decisions.
As pop culture continues to evolve, it will remain an important factor for investors to consider when analysing market trends and weighing up the potential for risk and reward,” concludes Mosime.