2100% in 12 Years! Sony Eventually Flipped the Crisis and the Long Journey Just Began

Sony's shares have just closed at an all-time high, with the Tokyo market closed on Wednesday, following the strong bullish momentum in the U.S. market.

Notably, the previous high that Sony surpassed in this recent surge dates back 24 years to March 2000. During this period, as the dotcom bubble burst, Sony's market value once plunged by 95.37% (in December 2012), before rebounding and peaking again, skyrocketing 2100% until now. In addition, Sony's (SONY) ADR listed in the U.S. market also rose nearly 3% pre-market.

This 24-year deep V reversal reflects the value reconstruction of a former electronics industry giant transforming into a massive entertainment empire, as games, film entertainment, and the content economy have become the darlings of the capital market.

It is noted that BlackRock increased its holdings of Sony stock last week, and the Norwegian Government Pension Fund also added to its position earlier this year. The Saudi sovereign wealth fund, which favors the entertainment industry, is also actively eyeing investment opportunities in Sony.

Sony expects its operating profit for the current fiscal year ending in March next year to reach 1.31 trillion yen ($8.6 billion), about six times that of the 1999 fiscal year. The entertainment business is expected to contribute 60% of the overall profit, while the electronics business is no longer reported as a separate segment.

Mizuho Securities predicts that by the 2026 fiscal year, profits from Sony's gaming division will increase by 40% from this year's expected level, while music and movie profits will grow by more than 20% and 50%, respectively.

Despite Sony's vast array of entertainment IP resources, the company's operational level still falls short of the world's top entertainment giants, which is the logical basis for analysts' continued bullish outlook on Sony's future stock performance.

Mizuho Securities expects that with the entertainment business as the driving force, Sony's earnings per share will reach 229 yen in the 2027 fiscal year, 40% higher than the company's expectations for this fiscal year. Assuming the P/E ratio remains unchanged, this also implies a 40% upside potential in the stock price.