Many of L.A.’s publicly traded companies saw their stock prices rebound over the past 12 months, a shift in fortune fueled for a number of these firms by the declining impact of Covid-19.
This year’s Business Journal list of 100 total public companies features 37 L.A. businesses that posted net gains in their market capitalization for the calendar year ending June 30, and several of those have seen their valuations jump as the pandemic’s grip on the economy weakened.
One of the biggest gainers in dollar terms market cap on this year’s list, for example, is Beverly Hills-based Live Nation Inc., the Ticketmaster parent company that saw its market cap – or the total value of its stock – jump by $2.2 billion, or 12% year over year, to $21 billion.
“Live Nation got slammed by Covid because people weren’t going to live events,” said Lloyd Greif, the president and chief executive of the downtown-based investment banking firm Greif & Co. “Now everybody is forking over huge dollars for concert tickets or anything that’s live, like sporting events. People just can’t get enough, and Live Nation is riding that post-Covid wave.”
Another post-pandemic beneficiary is the largest percentage-based gainer in market cap on this year’s list: Westwood-based outpatient imaging provider RadNet Inc., which saw its valuation climb by $1.15 billion, or 119% year over year, to $2.1 billion.
“RadNet had a huge move higher as many of the diagnostics and medtech companies have been performing well,” said Sahak Manuelian, the managing director and head of equity trading at downtown-based Wedbush Securities. “As we come out of Covid, people are able to go out and take care of their health care issues that maybe were put on the back burner during Covid, where people were just literally scared to leave the house.”
Dining out is up
Cheesecake Factory is another local public company that has seen its stock value increase as the pandemic diminished. The Calabasas-headquartered restaurant chain’s market cap jumped 26% between June 30 of last year and June 30 of this year to a total of $1.7 billion.
“People are going out to eat now, whereas during Covid they were staying home – they weren’t braving restaurants,” said Greif. “Cheesecake Factory is an affordable restaurant option, and it’s a family place. I think because there are more gatherings going on now, and more people feeling comfortable about going into restaurants, Cheesecake is a beneficiary.”
Travel is a sector that’s certainly soared in the post-Covid economy, and one L.A. public company that’s been profiting is Air Lease Corp., which purchases aircraft and then leases them to airline companies around the world. The Century City-based firm saw its market cap climb 22% year over year to $4.5 billion.
“Aircraft is in demand again,” Greif said. “And the nature of Air Lease’s business model totally ties into the upswing in travel, which is a direct result of people feeling comfortable to take to the skies again. People are traveling again, and they’re traveling with a vengeance this summer.”
Another of the largest gainers in dollar market cap this year was Activision Blizzard, which has made all sorts of headlines thanks to the Federal Trade Commission’s recent efforts to block Microsoft from acquiring the video game developer responsible for popular titles including “Call of Duty” and “World of Warcraft.”
Santa Monica-based Activision saw its market cap climb $4.1 billion, or more than 6.8% year over year, to $65 billion, and Wedbush Securities’ Manuelian said it’s not just Microsoft’s acquisition that’s driving the video game producer’s jump in valuation.
“Activision is one that’s been acting really well this year just based on its fundamentals,” he explained. “These guys have really been putting out some pretty cool games that people want to see.”
Skechers stepped up
Skechers USA Inc. not only posted one of this year’s most impressive dollar gains, but also one of our list’s largest percentage increases in market cap. The Manhattan Beach-based footwear giant saw its valuation climb by $2.5 billion, or more than 46% year over year, to a total of $8.1 billion.
“Skechers is a great company, and it always has been, but I think they are a bit of an unsung hero of Southern California,” Greif said. “It’s a very well-run company that’s been below the radar for too long. They’re the third-largest footwear company in the world behind Nike and Adidas.”
Greif added that Skechers is benefiting as consumer concerns shift following the pandemic.
“We talked about Covid-19 being in the rearview mirror. Well, people are worried about a recession being in the windshield,” he explained. “So, if we’ve got a recession coming, where do you want to be? Well, you want to be (in an) affordable but a good product. Skechers does have high-priced shoes, but they also have very affordable, very accessible, low-priced shoes. When the consumer is trying to make every penny count, that plays right to Skechers’ business model.”
Century City-based Ares Management Corp., meanwhile, posted the largest market cap dollar increase this year. The alternative asset manager saw its valuation surge by $7.1 billion to a total of $17 billion.
Downtown-based Reliance Steel & Aluminum Co. also posted impressive growth in dollar market cap terms, seeing its valuation jump $5.5 billion, or 53% year over year, to $16 billion. And Edison International, the Rosemead-based parent company of the Southern California Edison electric company, enjoyed a $2.4 billion valuation increase to a total of $26 billion.
Acknowledging this year’s success by a number of well-established, large-cap L.A. public companies, Greif was quick to note, however, that next year’s Business Journal list may include some new players.
“A perfect example of that would be an Erewhon, which is privately held, but it’s based here in Los Angeles. Their performance is skyrocketing,” Greif said of the organic grocery store chain. “Will it turn out to be a fad, or will you see Erewhon go public at some future point? … I think the IPO market is about to rebound. I think we’re going to see a spate of new public companies in the next 12 months, and that activity will increase over where it was over the last 12 months.”
