On November 20, the most important sports festival in the world officially began. Despite the controversy over the country chosen as host, the 2022 FIFA World Cup kicked off in Qatar and will last until December 18, when the final of the tournament will be played at the Lusail Stadium.
Billions of people around the world are watching the World Cup for the attraction of seeing superstars like Lionel Messi, Cristiano Ronaldo, Neymar Jr., and Kylian Mbappé go in search of glory for their nations.
The FIFA World Cup is a unique competition due to its massiveness and scope. No other sporting event generates as much expectation and has as large an audience as this tournament. The importance of the World Cup for the people is reflected in the numbers: the final match of the World Cup in Russia 2018, between France and Croatia, had 1.12 billion viewers, 5 times more than the Super Bowl in 2022.
The magnitude of this tournament led to an investment of close to $220 billion to hold the 2022 edition in Qatar, making it the most expensive World Cup in history. Most of the expenditure came for the construction of stadiums that comply with the international implications of the highest soccer entity, FIFA, and also for the infrastructure of Doha, the capital of Qatar, to provide a multicolored and memorable atmosphere for all those who attend the top soccer event.
An event that meets all these characteristics is bound to generate several commercial implications. But which companies will benefit the most?
Nike, Inc.
On the international stage, Nike should be mentioned. The footwear, apparel, and sports equipment company has had a complicated year due to its shares dropping more than 36%; however, with the World Cup, everything can change.
Nike is one of the companies with the most representation in the apparel of the teams participating in the World Cup; in fact, of the teams qualified for the round of 16, 10 of them wear Nike apparel.
This is a very dominant figure and was surely one of the main driving forces behind the US company’s sales. In the last month, the stock has risen about 18% and the figures could improve in the near future.
Electronic Arts Inc.
Electronic Arts, on the other hand, is another company with upside potential during the World Cup season.
Within its EA Sports category, it has FIFA 23, the most acclaimed video game among soccer fans. Despite the fact that the company’s net bookings fell 5.4% year-on-year to $1.75 billion during the second fiscal quarter, with the arrival of the World Cup they will have new tournament-related content within their franchise game and this could bring a lot of benefits.
Trying to emulate the skills of the world’s leading sports figures and simulating how the tournament might unfold is one of the public’s favorite pastimes. “We are confident in EA’s ability to grow the franchise in a World Cup year, and especially in its ability to grow this quarter, which is historically strong in its own right… We continue to believe that the video game industry is undervalued, and has historically traded at a significant premium to the market multiple,” stated analyst Michael Pachter.
EA has achieved to raise its 2023 EPS forecast from $2.79-$2.87 to $3.11-$3.34, showing that the FIFA World Cup may possibly help as a catalyst for earnings and profits.
The Coca-Cola Company
Finally, The Coca-Cola Company will surely be one of the companies that will benefit the most from the World Cup.
The company set aside $400 million for the World Cup advertising campaign alone. The host country of the tournament, Qatar, prohibits the sale of alcoholic beverages, so Coca-Cola is one of the most widely distributed beverages in restaurants, bars, and even in the stadiums where the matches take place.
Coca-Cola will undoubtedly benefit from the massive number of people who came and will continue to come to Qatar.
In addition, Coca-Cola is one of the official sponsors of the FIFA World Cup. Thus, with the global audience for the tournament, the Coca-Cola brand will remain in the consumer’s mind as the leading non-alcoholic beverage company and provide a stable base for any investor’s portfolio.
Back in 2010, Coca-Cola had a 5% growth in sales from the World Cup held in South Africa. This represented a $550 million increase in sales from the event. Chances are that Qatar 2022 may have similar results.
Undoubtedly, the World Cup is one of the most profitable events for all the companies linked to it. These are just some of the many brands that will be in the spotlight during the event. Make sure to do your own research before getting your hands on any of them. What option do you like the most?
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(Information in this post is for general informational purposes only. It cannot and should not be considered as suggestions or recommendations regarding investing or financial decisions.)
