What Happened?
Shares of global media and entertainment company iHeartMedia (NASDAQ: IHRT) jumped 24.1% in the morning session after reports surfaced that Netflix was in talks to license video podcasts from the media company. According to the reports, the streaming service sought exclusive rights to video versions of iHeartMedia's popular podcasts, which would prevent full episodes from being uploaded to YouTube. Some of the well-known podcasts reportedly involved in the discussions included 'The Breakfast Club' and 'Stuff You Should Know.' The potential deal was seen as a move for Netflix to compete more directly with YouTube in the video podcast space. The news was met with strong investor enthusiasm, pushing the stock to a two-year high during the session.
The shares closed the day at $3.99, up 37.3% from previous close.
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What Is The Market Telling Us
iHeartMedia’s shares are extremely volatile and have had 72 moves greater than 5% over the last year. But moves this big are rare even for iHeartMedia and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 11 days ago when the stock gained 2.3% on the news that a cooler-than-expected inflation report fueled optimism for potential Federal Reserve rate cuts. The September Consumer Price Index (CPI) rose 3.0% year-over-year, coming in just below the 3.1% analysts had forecast. While still above the Federal Reserve's 2% target, investors interpreted the slight cooling as a sign that inflationary pressures may be easing, potentially giving the central bank room to consider interest rate cuts in the near future. Sectors that are typically sensitive to interest rates, such as real estate and utilities, saw a notable lift. Lower rates can reduce borrowing costs and increase the appeal of dividend-paying stocks, boosting investor confidence in these areas.
iHeartMedia is up 93.6% since the beginning of the year, and at $3.91 per share, has set a new 52-week high. Investors who bought $1,000 worth of iHeartMedia’s shares 5 years ago would now be looking at an investment worth $463.82.
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