Skate's Report: 2014 - The Worst Year for Global Art Industry Stocks

07.01.2015

2014 was the worst year for the global art industry companies tracked by Skate’s Art Stock Index (SASI) since 2005. SASI tracks 16 listed companies that derive most of their business from servicing the art market, collectors and/or artists, with business models from art auctions and dealers to art media companies and image licensing platforms. The SASI index serves as one of the benchmarks that the Tiroche DeLeon Collection has been using for tracking comparative performance.

Skate’s Art Stock Index lost 25.8% in 2014 thus significantly underperforming all general market benchmarks. This massive decline was largely driven by SASI three largest companies by market cap, Sotheby’s, Shutterstock and Poly, that saw double digit declines in their share price this year. 2014 performance was particularly painful (-27.6%) for Chinese auction powerhouse Poly who went public earlier in 2014. In fact, all of the 2014 art industry IPOs did poorly, with British Scholium also losing 22% from its IPO date.

Exhibit 1: Art Media Stocks and Market BenchmarksIn total, 11 out of 16 art industry companies lost value in 2014, some quite dramatically – US image licensing and user generated image based e-commerce site Café Press lost 63%, Japanese auction Shinwa – 55%, and German art dealer Weng Fine Art – 51%. The art media segment of Skate’s Art Stock Index was the only one where the majority of stocks gained in 2014.

Looking to 2015, Skate's expect a lot of action around the $7.5bn art industry, as measured by SASI. They anticipate IPOs of Getty Images and Philips auction house, and believe Sotheby’s, Stanley Gibbons, ARTNEWS (the owner of Skate’s) and Shutterstock are likely to continue (or resume) their acquisition activities, with companies like artnet.com AG and Café Press vulnerable to a takeover.

Exhibit 2: Skate's Art Stock Index Constituents

Skate's further believe that SASI-tracked incumbents are increasingly more vulnerable to art industry market entry from global giants. They quote the case of Adobe entering the image licensing business through the acquisition of Fotolia as just one example of how the arrival of major competition can change the fortunes for art industry players. They name eBay, Amazon, and Adobe as likely entrants.