Who’s the top dog in streaming?
While Nielsen’s “Tops of 2020” report highlighted Netflix’s lead in original and acquired television series, one relative newcomer is making a big splash on the streaming cinematic front: Disney.
Nielsen said seven of last year’s 10 most-streamed movies were watched on Disney+, which launched in November 2019.
Overall viewership underwent a slight shift, according to the market research firm, with Netflix taking up just 28% of streaming time — down from 31% in 2019 — and Disney+ accounting for 6%.
“There’s room for both” in the industry given that their “price points are not extreme,” said Quint Tatro, founder and chief investment officer of Joule Financial.
“I have three kids. We’re not canceling either,” he told CNBC’s “Trading Nation” on Wednesday. “From an investment standpoint, it’s a valuation question. And I just can’t touch Netflix here.”
Netflix’s nearly 3% rise on Wednesday brought the stock to an almost 86 times price-to-earnings ratio, and with its debt climbing to 1.5 times its equity, “it’s just not an attractive play,” Tatro said.
“If we had a significant decline in this name where all of a sudden everybody threw it out saying, ‘Oh, they’re dead’ — let’s say there was a new player in the game or something like that — maybe you can pick shares up. But it’s just not a touch for me,” Tatro said.
Although Disney didn’t initially get the credit it deserved for Disney+, the stock has had an “unbelievable comeback” from the March lows, Tatro added.
“We own the stock. We’ve been rewarded for holding the shares. We did buy near the March lows. I’m very pleased with all that,” he said.
But with Disney trading at 40 times forward earnings as of Wednesday, “this is one that’s got to come in as well,” Tatro said. “So, I think there’s room for both. … Longer term, I think Disney is the play because they’ve got more than just the streaming, but you’ve got to be patient. Next correction, it’s on the shopping list. That’s when you pick up shares.”
TradingAnalysis.com founder Todd Gordon agreed that it’s possible to have the best of both worlds, saying investing in streaming doesn’t have to be “an either-or strategy.”
Still, Disney shares have exhibited noteworthy momentum over the last year, Gordon said, referencing a chart.
“Could you see yourself taking a bet at the Covid lows, knowing the country was going to be shut down, that Disney … would outpace Netflix in percent gains?” Gordon said.
Disney stock is up over 104% since its March bottom, while Netflix has gained nearly 70%.
“You could counter and say, ‘Well, Disney fell further,’ but if you look at the breakout from both stocks, they’re both about 20% from the highs,” Gordon said. “So, I don’t think it’s either or. They’re serving two different [demographics].”
Disclosure: Joule Financial owns shares of Disney.
