CyberAgent (OTCMKTS:CYAGF) may not be a name you're immediately familiar with, but its industry is likely a much more familiar front for most. It was up 17.6% in the latest round of trading, and gains like that often come with questions. So what was it that drove CyberAgent up to that level? A few separate factors kicked in at once to generate substantial new gains for the digital marketing powerhouse.
Ups and Downs Online After Covid-19's Arrival
CyberAgent, for those not familiar, is a Japanese marketing firm that focuses mainly on mobile and online operations. The company runs its own video streaming service known as AbemaTV, which offers 25 separate channels covering news, original shows, and more. The company also has a particular focus on video games; not only does it offer video channels connected to e-sports, it also delivers several games specifically for smartphones. Perhaps the biggest development of all is that it also focuses on internet advertising, which makes sense given the sheer amount of exposure CyberAgent has to online life in general.
This leaves CyberAgent in an unusual position in terms of the response to Covid-19; Japan—where CyberAgent mainly focuses its efforts—on the whole had a comparatively lenient lockdown system which focused mainly on “individual rights and regional autonomy,” both points codified as vital in Japanese law. A state of emergency was declared on April 6, but by June 1, much of the federally-mandated lockdown provisions had slipped away. Thus, many of the problems that hit online operations back in 2020—like slipping advertising sales rates—may not have been such an issue.
One major development for the company recently hit, however; about a month ago, the company was added to the Roundhill Streaming Services & Technology ETF, which allowed it to draw in new potential investors looking to get in on an exchange-traded fund that dealt mainly in streaming services.
Comparatively Light, and Cautious, Traffic From Analysts
The impact of Covid-19 on CyberAgent, as well as the prevailing conditions online, makes for an unusual picture for CyberAgent, especially while trying to explain the explosive gains recently seen therein.
The broader analyst picture, based on our latest research, is actually somewhat limited. Analyst coverage of the company started back in April 2020, and featured one analyst—Jefferies Financial Group—stepping its analysis down from “buy” to “hold”, which became the exact picture for the next nine months. In late January, a second analyst—Goldman Sachs—stepped in and also declared CyberAgent a “neutral”, which has been maintained up until the present day. Neither company maintained a price target on the company, however, which currently sells at $68.90 per share as of this writing.
Diversification and Recovery
So now, we have a better idea of what fueled recent gains at the company. Its still-comparatively-new status as part of an ETF could easily have drawn some new interest, and its position as a major factor in Japanese streaming video and gaming likely got some interest going as well.
We've seen what's been happening in streaming video in the United States, as firms like Netflix (NASDAQ:NFLX) and Disney+ (NYSE:DIS) enter the streaming video market. Much of 2020 was made up of streaming video for a lot of people; stuck in the house with little to do besides occasionally venture outside for groceries, streaming video became a way of life for many. However, we also know that online advertising took a bit of hit during the pandemic as spending on anything that required you to leave the house was crippled for several weeks and has yet to fully recover.
We know that mobile gaming has made a lot of gains during the pandemic, in much the same way that gaming in general has. People with a lot of time on their hands who may have been fired from work altogether or merely had their work shut down due to coronavirus restrictions have time to play video games pretty extensively, and want something to do that's exciting, or at least not actively unpleasant. Video games fit that bill pretty nicely, and given how connected to video gaming CyberAgent actually is, the fit is especially clear. CyberAgent not only offers several games itself, but offers streaming video directly connected to gaming, as well as to tangentially-connected content like anime.
With a recovery narrative starting to kick in due to vaccine take-up rates, and a substantial market for all things streaming and video gaming, CyberAgent is likely looking like a much more attractive prospect to investors. Sure, the amount of streaming and gaming is likely to fall off with people going back to work, but in Japan, the losses have likely been seen as the country engaged in a lot less lockdown fever than, say, Europe or North America. Those looking to connect to the streaming video market in Japan will likely do well to consider CyberAgent for further gains.
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