Why Investors Were Roaring for Lionsgate Stock Today
Key Points
That company denied interest, though, and it quelled a hot rally.
Lionsgate still ended the day well in positive territory.
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Lionsgate Studios (NYSE: LION) received nearly as much attention as the larger Hollywood studios on Tuesday, at least from an investor perspective. Market players jumped into the company's stock after a report that a streaming giant might be interested in acquiring it.
Although the rally cooled after the streamer said it had no interest, Lionsgate stock still finished the day almost 14% higher.
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The plot thickens
That apparently interested party is Netflix. Tuesday morning, in a report stating that Netflix had made an unsuccessful play for Roku, (Fox was ultimately the winner in that attempt), the news site Semafor said the streaming company remained interested in potential acquisitions.
Image source: Getty Images.
A potential target for these ambitions is Lionsgate, Semafor quoted an unidentified "person familiar with the matter" as saying. The site added that Netflix is one of "a number" of media companies considering a play for Lionsgate.
Later in the trading session, however, entertainment industry site The Wrap reported that an unnamed Netflix spokesperson said the company is "not interested" in Lionsgate and won't pursue an acquisition.
Unquenched thirst
Semafor's sources claimed that Netflix remains determined to go the acquisition route, following the saga that saw it lose to Paramount Skydance in the bruising contest to purchase Warner Bros. Discovery.
Given that, I wouldn't take Netflix's denial of interest in Lionsgate at face value. The latter company might just turn out to be another big Hollywood takeover story worth following for entertainment sector investors.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix, Roku, and Warner Bros. Discovery. The Motley Fool has a disclosure policy.
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