4. Sony Group Corp. (NYSE:SONY)
Number of Hedge Fund Holders: 21
Sony Group Corp. (NYSE:SONY) is a global leader in consumer electronics, entertainment, and technology. It’s known for its innovative products, such as televisions, cameras, audio systems, and gaming consoles like PlayStation. It also produces and distributes a range of entertainment content, from movies and music to video games and streaming services.
The company’s recent alliance with KADOKAWA CORPORATION made it the largest shareholder in KADOKAWA with an acquisition of 12,054,100 shares, which represents ~10% ownership. It’s a major Japanese media conglomerate involved in publishing, film, gaming, animation, and digital media. This alliance aims to use both companies’ strengths to maximize the global value of intellectual property. They plan to collaborate on adapting KADOKAWA’s IP into various media formats and expand global content distribution.
On January 8, Morgan Stanley named Sony Group Corp. (NYSE:SONY) its top pick in consumer electronics and Japan semiconductors, raising its price target to ¥4,000 from ¥3,400. This was fueled by the company’s sustained growth, particularly in its games and network services segment. This comes from its user base of over 110 million players, its appeal to game developers, and its evolving business model. By effectively using player data and AI to enhance user engagement, PlayStation has increased software and service sales while improving efficiency and reducing costs.
Aristotle International Equity Strategy highlighted the company’s strong fourth-quarter performance. This was driven by PlayStation’s robust network effects, Crunchyroll’s expanding reach, and the growing demand for the company’s image sensors. The firm stated the following regarding Sony Group Corporation (NYSE:SONY) in its Q4 2024 investor letter:
“Sony Group Corporation (NYSE:SONY), the global provider of videogames and consoles, image sensors, music, and movies, was a top contributor for the period. The company reported strong results driven by third-party gaming revenue and record PlayStation 5 console profitability. This was achieved despite lower console sales, which, in our view, exemplifies the strength of PlayStation’s network effects. PlayStation is the world’s largest gaming platform with 116 million monthly active users, making it an attractive market for game developers and allowing users to play the most advanced games at lower costs than PCs. In its Pictures segment, Crunchyroll (the anime business Sony acquired from AT&T in 2020) signed a distribution agreement with YouTube Primetime Channels, the market share leader in streaming services, which we believe will increase Crunchyroll’s subscriber base. Though a singular example, it illustrates management’s ability to better execute and further improve the segment’s profitability, a catalyst we previously identified. In addition, Sony reported improved sales of image sensors for mobile products as the global smartphone market continued its gradual recovery. Sony’s image sensor business has the largest global market share, and we believe, longer term, it is uniquely positioned to benefit from increasing demand for both autonomous driving technology in vehicles and improved image quality in smartphone cameras. As such, we continue to admire Sony’s capacity to build on its industry leadership and optimize its operations, which includes its plan for a partial spinoff of its Financial Services segment in October 2025.”
