2014 was the worst year for the global art industry companies tracked by Skate’s Art Stock Index (SASI) since 2005. SASI tracks 16 listed companies that derive most of their business from servicing the art market, collectors and/or artists, with business models from art auctions and dealers to art media companies and image licensing platforms.
Skate’s Art Stock Index lost 25.8 percent in 2014 thus significantly underperforming all general market benchmarks. This massive decline was largely driven by the three largest companies by market cap, Sotheby’s, Shutterstock, and Poly, which saw deep double-digit dips for their share price this year (see Exhibit 2). 2014 performance was particularly painful (negative 27.6 percent) for Chinese auction powerhouse Poly since the firm went public in 2014 (see our coverage at www.skatepress.com/market-notes/issue-84/) and then destroyed value for its IPO investors who so far lost almost 3 dollars on each 10 they invested at IPO, which was clearly overpriced in the first place. In fact, all of 2014’s art industry IPOs did poorly, with British Scholium also losing 22 percent from its IPO date (see Scholium IPO coverage at www.skatepress.com/daily-wrap/london-listed-scholium-group-joins-skates-art-stock-index/).
Exhibit 1. Art Media Stocks and Market Benchmarks
In total, 11 out of 16 art industry companies lost their equity value in 2014, some of them dramatically—U.S. image licensing and user-generated image-based e-commerce site Café Press lost 63 percent, Japanese auctioneer Shinwa lost 55 percent, and German art dealer Weng Fine Art lost 51 percent. The art-media segment of Skate’s Art Stock Index was the only one where majority of stocks gained in 2014 (see Exhibit 1).
Exhibit 2. Skate’s Art Stock Index Constituents
Looking to 2015, we expect a lot of action around the $7.5 billion art industry, as measured with Skate’s Art Stock Index. IPOs of Getty Images and Phillips auction house are widely anticipated, Sotheby’s Collectors’, Stanley Gibbons, ARTNEWS S.A. (the owner of Skate’s) and Shutterstock are likely to continue (or resume) their acquisition activities as their cash position allows for that, and companies like Artnet.com AG and Café Press remain very vulnerable to a takeover.
That said, the major source of pressure on the global art industry trade is going to rise, as SASI-tracked incumbents are increasingly more vulnerable to art industry market entry from global giants. The case of Adobe entering image licensing business through its acquisition of Fotolia is just one example of how the arrival of major competition can change the fortunes for art industry players (for more, visit www.skatepress.com/market-notes/adobes-creative-cloud-eclipses-shutterstocks-rising-sunstakes-upped-digital-image-licensing-game/). With eBay, Amazon, Adobe and dozen of other major corporate giants looking at the art industry for potential market entry or getting in already, SASI constituents are more vulnerable than ever.
Welcome to an exciting 2015.
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