How to Invest in Taylor Swift
Whether you’re a Swifty or a hater, it is undeniable that Taylor Swift will generate nearly $5 billion in income for the US economy within 2023. Undoubtedly, she is a global success, but unfortunately, you can’t just invest in individual people on the stock market. How can investors capitalize off the success of Taylor Swift’s tour?
Although you could invest in a record label, a volatile endeavor, there’s a different way to invest your money in Swift. Several successful companies jumped at the opportunity to sponsor the tour for the iconic artist. The SMART approach is looking at the companies surrounding her, analyzing risk level, and if her success can rub off on them. Let’s dive into it!
Why Taylor Swift?
Instead of answering, “Who is Taylor Swift?” (cause duh), asking why Taylor Swift has amassed such success seems prudent.
Why Taylor Swift? First releasing her music in 2006, Swift started accumulating fans left and right with her catchy, relatable songs. In 2021, Swift began rereleasing her original albums following a split with her first record label, Big Machine Records. The record label owns her masters, so she decided to re-create the nostalgic albums her fans fell in love with. Picture someone listening to her from childhood into adulthood and then getting the opportunity to relive all those memories again. That is part of the surge behind T-Swizzle’s success. The loyal masses of fans want to support someone they felt they grew up with.
When is her tour? The Eras Tour, covering 10 albums (eras of Taylor, get it?), is scheduled from March 17, 2023 – November 23, 2024.
Who’s sponsoring Taylor Swift?
Companies see the pull that the pop artist has, leading to what you’re thinking: How can I make some gains? From clothing to travel to selling tickets, companies are jumping at the idea of participating in the frenzy of Swifties.
Major Companies Sponsoring the Eras Tour:
- American Airlines (AAL): Offering a Taylor Swift airline experience by creating flights solely made to go to her concerts. Along with the Capital One collab for exclusive pre-sale tickets.
- AMC (AMC): The exclusive release of the Taylor Swift: The Eras Tour Concert Film with rewards programs surrounding its release.
- Capital One (COF): Capital One cardholders get exclusive access to presale tickets and various concert experiences contingent on the card.
- Levi’s (LEVI): The long-time jean retailer has an exclusive Taylor clothing line sold in stores, online, and concert venues.
- Live Nation Entertainment (LYV): The most apparent sponsor sells Swift’s tickets, owns venues, and is contingent on the smooth tour performance.
- Spotify (SPOT): The streaming platform highlights exclusive audio content like music, BTS, interviews, and live recordings, on top of tour experiences for fans.
Why would these companies sponsor Swift? With an audience ranging from 10 to 60 and a positive image as an individual, Taylor will increase outreach while not damaging perceptions around the company. In fact, she’s predicted to encourage a new wave of customers. Capital One could expand its credit card use to a new crowd who want pre-sale tickets. American Airlines might encourage concertgoers to fly with them or show up sporting Swift’s sponsored line of clothing at Levi’s. With fans going goo-goo for a lifetime experience, they throw money at the wall for their concert experience. Meaning you can bet on the companies experiencing an influx.
The Performance of Swift’s Sponsors
Regardless of Swift’s success, will it have a notable impact on sponsors? Using Equities Lab, I created a screener for the companies listed above, then made tickers for each company to differentiate performances.
Success isn’t automatically related to Taylor for such large companies, and the same goes for any downturns. Looking at performance starting in January 2023, the image below depicts the 6 individual companies and their combined data. From a visual standpoint, Spotify is going above and beyond, AMC is tanking, and the other companies are chugging along around the S&P’s trajectory.
After isolating the screener and the individual companies, some are definitely doing better than others! Spotify and Live Nation Entertainment are mostly outperforming the market, AMC and Levi’s are significantly underperforming, and American Airlines and Capital One are middle of the road. There isn’t any noticeable impact based on the numbers within this year that you could automatically contribute to Taylor without more info.
The next evaluation examines the companies’ financial metrics and green/red flags through the tear sheet feature in Equities Lab and allows an analysis of each company’s health.
| Analysis Components | AAL | AMC | COF | LEVI | LYV | SPOT |
|---|---|---|---|---|---|---|
| Closing Price | 14.68 | 13.1 | 103.5 | 13.93 | 84.05 | 157.56 |
| 52 Week Range | 11.65 — 19.08 | 10.72 — 94.85 | 83.93 — 123.09 | 12.8 — 19.36 | 64.25 — 191.74 | 69.28 — 182 |
| Market Cap | 9.624b | 738.47m | 39.06b | 5.426b | 19.45b | 29.97b |
| Volume/Avg. 30 Day | 14.66m / 22.84m | 22.75m / 12.82m | 1.547m / 2.105m | 2.805m / 1.582m | 1.58m / 2.221m | 1.452m / 2.517m |
| P/E | 3.654 | ? | 7.345 | 12.51 | 75.3 | ? |
| Dividend/Yield | 0 / 4.8 per 1,000 | 0 / 2.9 per 1,000 | 2.4 / 0.0232 | 0.44 / 0.0345 | ? / ? | ? / ? |
| EPS T12M | 4.04 | -5.647 | 13.09 | 1.106 | 1.13 | -6.009 |
| Piotroski F-Score T12M | 7 | 2 | 6 | 4 | 6 | 4 |
| Beta | 1.341 | 1.861 | 1.12 | 1.231 | 1.403 | 1.853 |
| Red Flags | None | Twenty-day drop, increasing shares outstanding | None | None | Increasing shares outstanding | Low cash flow score |
| Green Flags | Capital expenditure less than depreciation, high-income statement score | Capital expenditure less than depreciation, high income statement score | Operating cash flow positive 4q, decreasing shares outstanding, high cash flow score, and sales growth and high asset turnover | Decreasing shares outstanding | Sales growth and high asset turnover | Sales growth and high asset turnover |
Noticeable Impact
Although there isn’t a significant increase that’s notable in the visual graph, companies have reported positive outcomes from the Sponsorship with the record-breaking artist.
Measurable impact:
- American Airlines (AAL): The previously struggling airline saw a $10 million increase in revenue at the beginning of the tour.
- AMC (AMC): The announcement of the Eras Tour movie immediately positively impacted the movie theater company by going up 7% because of pre-sale tickets reported as 100,000 sold.
- Capital One (COF): Capital One saw an increase in new credit card applications and a 10% increase in usage of credit card spending after Taylor Swift’s encouragement through promotional deals.
- Levi’s (LEVI): The clothing brand reported selling $1 million in merchandise in just the first week; imagine the rest of the tour.
- Live Nation Entertainment (LYV): Despite the controversial website crash, LYV still persevered with a positive mindset. The company experienced a 73% increase by selling the artist’s tickets.
- Spotify (SPOT): The streaming platform saw a 20% increase in streams surrounding Swift’s music and other content during the tour.
Looking back at the graph, Taylor’s tour started in March, and there was an immediate increase for Spotify, American Airlines, Live Nation Entertainment, and Levi’s within the month.
Worth investing in? Takeaways!
The tricky part is determining if it’s worth investing in by banking on the impact of Taylor Swift. Obviously, she’s bringing in revenue, new customers, increased activity, and a strong fan base. Does that mean you invest just in the hope that it will turn out positively in the stocks? The companies are all bigger than the nearly year-long event of this concert. They can’t anticipate growing SOLELY because of the Eras Tour.
Consider Your Strategy: There’s more to life than Taylor Swift (sorry, Swifties) and more to investing than her impact on a company’s revenue. Look at more than the time frame or the money being raked in. Do you see these companies as long-term investments? Do you only want to capitalize short-term off of the influx of revenue? Are the red flags for AMC too big for you to want to invest in it? Is the time frame too short to evaluate a company’s success in the future?
At least two of the companies have significantly increased in performance since the tour began, but is that all because of one person? Maybe a different strategy is more effective, rather than anticipating the all-too-well movements T-Swizzle.
