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- HBO's "Succession" unveiled a shocking twist in episode three with the death of a pivotal character.
- It led to a huge slide in the value of the fictional media conglomerate Waystar Royco.
- There's real-life precedent that shows why a CEO can cause huge share price swings when they depart.
This article contains spoilers for episode 3 of "Succession" season 4. Don't read on if you don't want key plot details revealed.
At one point in episode three of the final season of "Succession," as news of Logan Roy's fate begins to emerge, his son Roman points to a screen showing a share price chart.
The stock is, of course, Waystar Royco, the multibillion-dollar conglomerate at the heart of the award-winning HBO drama – and on news of Roy's death, its stock plunged.
"There he is. That is Dad," says his son Roman, as he measures Logan's worth to be the sizeable distance between his thumb and index finger.
Logan Roy, played by Brian Cox, is of course the founder and CEO of Waystar Royco – a media, theme parks, and resorts conglomerate that reflects elements of companies including Fox, News Corp and Disney. He was portrayed as an omnipotent boss of the group, reflected in a cratering share price upon his death in the episode that aired April 9.
Does any CEO in real life hold a similar chokehold over the value of their company – and what does that mean for shareholders?
Past precedent
Waystar Royco's exact value is never made clear in "Succession" – although FT Alphaville estimates the company would be worth about $80 billion. In that context, Roy's death would be worth tens of billions.
But there is real-life precedent for a company's share price collapsing on news of a powerful CEO's ill-health.
When Apple's co-founder and then-CEO Steve Jobs announced in 2011 that he would be taking indefinite medical leave to deal with liver problems, shares fell as much as 6%, wiping tens of billions off the company's valuation. Jobs died of complications from a relapse of a pancreatic tumor 10 months later.
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Will O'Rourke, a "Succession" fan and wealth advisor for Prime Capital Investment Advisors, told Insider the dramatic fall in Waystar's stock could be realistic because of the huge influence Roy had as CEO.
"When you think of Tesla, what do you think would happen if Elon Musk died tomorrow? It'd be a pretty bad day for Tesla in the markets," O'Rourke said.
"Logan's power is depicted in the show as being manifest. When he says the others are pygmies and he's 100 feet tall, everyone in the world of 'Succession' probably saw Waystar that way too. So it's definitely very realistic."
The power of Logan Roy
There are downsides to a stock being so closely linked to a powerful CEO like Jobs, Musk, or Roy.
"When you have a company that's identity is tied so closely to its CEO, that's potential for a high level of risk," Henry Silva, advisor at Apollon Wealth Management, told Insider.
"When a company's identity is really tied to one individual, them dying would have a big impact on the shock – but typically, shares readjust after the initial stock. I think HBO are exaggerating the story a little bit to sell the impact of his death."
Indeed, there have been examples of a share price rally following the death of a CEO, because investors see it as a company decoupling from a deadweight boss.
When Gulf and Western announced the death of its CEO Charles Bludhorn in 1983 at the age of 56, its shares rallied 12.5% in a day – and went on to jump 40% in a week.
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Bludhorn, who like Roy died on a jet, was perceived to have held complete power over the company – so his passing came as something of a relief to investors. Coincidentally, like Waystar Royco, Gulf and Western also owned a film studio in the form of Paramount Pictures.
In "Succession," Roy's declining health has meant he hasn't always made sound business decisions – including an ill-conceived acquisition attempt for a group of local TV stations and attempting to cover up a cruise ship sexual assault scandal.
So even though Waystar Royco shares initially plummeted on news of his death, the investors of the fictional world of "Succession" might ultimately decide Logan Roy was more of a Bludhorn than a Jobs.