Sony (SNE) continues to establish itself as a major conglomerate and in mid-July, it completed the tender offer for its financial unit and took the business private. While Sony's operating income is expected to be down 26.7% Y/Y this year due to the pandemic, its sales are still going to be up thanks to the launch of PlayStation 5 in late 2020. The release of the next generation of console will undoubtedly create shareholder value, as there's already an indication that the demand for the new console is high. At the same time, Sony's gaming division, which generates the most amount of sales, will be able to minimize the company's downside this year and offset some of the losses of other businesses. While FY21 will be a mixed year for Sony in terms of performance, its future remains bright. For that reason, I continue to hold a long position in the company and have no plans to unwind it in the near-term.
Advantages and Disadvantages of Being a Conglomerate
Sony's stock has appreciated by more than 30% since my latest article on the company was published back in May. In recent months, the company continued to establish a stronger presence in gaming and finance businesses, both of which will be able to offset some losses of its other businesses, which were negatively affected by the pandemic. In gaming, Sony acquired a minority stake in Fortnite publisher Epic Games for $250 million. At the same time, it reached 45 million subscribers for its PlayStation Plus subscription service and launched two of its major AAA titles for this year The Last of Us 2 and Ghost of Tsushima. In finance, Sony completed the tender offer for its financial unit, which was trading publically, and now Sony Financial is a wholly-owned subsidiary of Sony.
