Time Warner (NYSE:TWX) one of the biggest players in the entertainment industry has had a mixed start to 2015 dropping off from over $85 to manage to bring itself back up to a closing price yesterday of $83.92, moving up 0.41% for the day.
We can’t predict what will happen with Time Warner’s (NYSE:TWX) stock price, however, here are 3 strengths and weaknesses of TWX likely to have an effect on the stock price in the future.
1. Diversified Revenue Streams
Time Warner draws their revenue from a variety of different streams. Such diversified revenues make the company much less vulnerable should one of their services suffer a drop off or even worse a crash. This means in the long term TWX should be able to weather the ups and downs of the economy and industry.
2. Geographic Concentration of Market
Most of Time Warner’s (NYSE:TWX) customers are geographically concentrated in the U.S. market. This lack of diversification exposes the company to economic dips in the US market without other geographies to counter.
3. Threat of Smaller Innovative Competitors
With the advent of the internet and streaming technologies there are a lot of small and nimble competitors entering the entertainment market that could prove a threat to TXW, an example of this is Netflix (NASDAQ:NFLX), with their cheap streaming entertainment service.
Time Warner (NYSE:TWX) is priced on a forward PE multiple of approximately 14.5, which is a bit below the market forward PE currently at around 17.6. This is probably fair due to the weakness of geographic diversification and innovative competition in the space discussed above.