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If tradition holds, South Park’s latest Ozempic storyline could mark a short-term top in shares of obesity drug makers.
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Shares of companies featured prominently in the animated comedy often fall in the following year.
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“One year after appearing on South Park, the median stock underperforms the S&P 500 by 7%,” Spectra Markets said.
South Park’s latest gag is aimed at the booming market for weight loss drugs like Ozempic — and the special could continue a long tradition of prominent stocks selling off not long after they’re featured on the animated comedy.
South Park: The End of Obesity special released last week tackled the growing popularity of Ozempic and Mounjaro as Eric Cartman tries to get his hands on the hugely popular weight-loss drugs.
Yet, if history is any indicator, the joke might be on investors.
An analysis by Spectra Markets found that when a publicly traded US company is prominently featured in a South Park episode, it tends to mark a short-term peak for the stock.
“One year after appearing on South Park, the median stock underperforms the S&P 500 by 7%,” Spectra Markets President Brent Donnelly said.
The thinking goes that the stock in question has likely reached peak popularity once its featured as a topic of conversation on South Park, similar to the contrarian magazine cover indicator.
“South Park has a 20+ year history of capturing the cultural zeitgeist and it’s impossible to argue that anything that is lampooned on South Park is not priced in,” Donnelly said. “By definition, anything featured is well-known and at risk of mean reversion after massive outperformance.”
Shares of Novo Nordisk and Eli Lilly have seen massive outperformance over the past few years as investors sized up the $100 billion potential of GLP-1 weight loss drugs.
Since the start of 2023, Eli Lilly and Novo Nordisk stock are up 121% and 97%, respectively, far outpacing the S&P 500’s gain of 40% over the same time period.
Other companies previously featured on South Park and saw underperformance in the stock market over the following year include cannabis companies MedMen and Tilray, social media giants Twitter and Meta Platforms, and consumer companies Starbucks and Walmart.
But not all those featured on South Park saw their stock prices peak shortly thereafter, with Microsoft, Yelp, and Netflix bucking the trend.
Either way, the study notes that when a company is featured on South Park, it’s more likely than not that all of the potential upside is already priced into the stock in the short-term, and investors shouldn’t be surprised of potential underperformance relative to the S&P 500.
“Not a bad time to lighten up on the GLP-1 basket. It’s all priced in,” Donnelly concluded.
Read the original article on Business Insider
From: Yahoo.com
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