Jessica Goodfellow
Feb 26, 2020

Dentsu stock slide continues amid Olympics cancellation concerns

Shares traded down another 2.5% on Thursday, hitting fresh 7-year lows. The advertising network is banking on the Olympics to help it return to profitability.

Dentsu stock slide continues amid Olympics cancellation concerns

Dentsu Group's shares have plummeted to fresh seven-year lows amid concerns that Tokyo's Olympic Games will be cancelled due to the COVID-19 outbreak.

The advertising network's stock closed 2.5% lower on Thursday to the lowest it has been since 2013. This, after it saw its share price plunge by 8% by market close on Tuesday (February 25), then slip a further 0.65% on Wednesday. Dentsu Inc stock is down 20% year-to-date.

Source: Google Finance

The stock has fallen amid rising concerns over the impact the current COVID-19 outbreak will have on Japan, specifically the biggest event in the country's calendar—July's Olympic Games. Dentsu is heavily involved in the planning and operation of the sporting event, which is one of the most important events on the advertising calendar. It was betting on the games to help it turn around its fortunes after sales and profit plummeted in fiscal year 2019.

Various sporting events across Japan have already been called off due to the outbreak as new cases have emerged in the country, one of the hardest hit outside China by the outbreak. A senior member of the International Olympic Committee (IOC) has estimated that there is a two- to three-month window to decide the fate of the Tokyo Games, which is scheduled to start on 24 July. Dick Pound, a former Canadian swimming champion who has been on the IOC since 1978, told the Associated Press that should the committee decide the situation is too dangerous, a cancellation is more likely than a postponement. 

It comes as the agency group has emptied its 5,000-strong headquarters in Tokyo after an employee became infected with the COVID-19 virus. Shiseido, which is headquartered in the same building, has also told its 8,000 employees who work in the area to work remotely.

Publicis Groupe has also seen its stock fall over the past few years, and is similarly trading at a near-2012 low.

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