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Disney+ vs Netflix: Which streaming stock to choose?

By Rob Griffin

Edited by Jekaterina Drozdovica

09:31, 5 August 2022

Disney+ vs Netflix: Which streaming stock to choose?
iphone 11 pro with the Netflix logo, Inc. and Disney Plus, which are two American entertainment companies. Photo: DANIEL CONSTANTE / Shutterstock.com

business struggles seen in decades. Household name companies are battling it out in a ferociously competitive marketplace to secure a significant share of the global viewing audience.

Two of the main brands in this increasingly popular sector are Disney+ (DIS) and Netflix (NFLX), but which stock looks the most attractive to investors? 

In this Disney+ vs Netflix comparison, we take a look at the two businesses, examine their fundamentals and subscriber numbers, and ask analysts who they believe will emerge victorious. 

Overview: Netflix vs Disney+

Netflix and Disney+ are rivals in the increasingly popular online streaming services space, where competitors vie for the attention of global audiences.

Both are coming under pressure to maintain and grow subscriber numbers. That means more original content, but it comes with a hefty price tag attached.

Netflix, which is based in California, US, started life as a mail order DVD company in 1997 and went public five years later. Over the past two decades, it developed streaming services, made its own original programmes, and expanded subscriber numbers around the world.

It has amassed an impressive catalogue of movies and television programmes.

Disney+ is part of the giant Walt Disney company, which was founded in 1923 and based in Burbank, California, United States. The company’s flagship direct-to-consumer streaming service was launched in November 2019 and is home to movies and shows from Disney, Pixar, Marvel, Star Wars, as well as National Geographic and The Simpsons.

It’s important to note that Disney+ revenues amount to only a fraction of total Disney revenues as its businesses also include parks, experiences, products, other media networks, and more.

The financial impact of trying to stay ahead of the pack is one of the biggest issues facing this industry, according to Danni Hewson, financial analyst at AJ Bell.

“Streaming services have found themselves on a never-ending merry-go-round where they have to cough up more and more cash to create, buy or retain content in order to retain or grow subscriber numbers,” she told Capital.com.

Netflix vs Disney+: How their stock price histories compare

Any comparison of Disney+ vs Netflix must consider how their respective share prices have performed over various time periods.

The stock price of NFLX has fallen 62% from $591.15 at the start of 2022 to $226.73 as the market closed on 3 August, 2022.  

However, shares are still 5% higher than the $181.35 level they were at five years ago in July 2017. The all-time high NFLX price, meanwhile, was $691.69 in November 2021. 

Netflix stock price, 2017 - 2022

Disney, meanwhile, is currently trading at $109.02, which is 10.6% higher than the $98.57 level it was at five years ago. It’s all-time high of $201.91 was reached in March 2021. 

This year has also been challenging for Disney investors with the DIS share price having fallen 30% from $156.76 in early January to $109.02 at the market close on 3 August, 2022. 

Disney stock price, 2017 - 2022

“Bargain hunters might be tempted to take a long look at Netflix, but Disney’s taken its licks this year as well, thanks to the slow reopening of some parts of the world and its shares are down more than 30% since the start of the year,” said Danni Hewson, financial analyst at AJ Bell. 

“They’re also down just over one percent on where they were five years ago, which is a point worth considering.”

Subscriber numbers

Subscriber numbers are the key metrics for streaming services as membership growth or slump indicates the trajectory of the business. How do they compare for Disney vs Netflix?

Disney+ had 137.7m paid subscribers, as of 1 April 2022, 33% more than the 103.6m at the same point last year.

Disney+ global subscriber growth, 2020 - 2022

Netflix, meanwhile, had 220.6m subscribers, which represented year-on-year growth of 5.5% over the 209.18m level for the second quarter in 2021.

However, it’s worth noting that while Disney+ added 7.8 million customers globally during this year’s second quarter, Netflix lost 200,000.

Netflix global paid subscribers growth, 2013 - 2022

Declining subscriber figures is the current weakness of Netflix compared to Disney+. Neil Macker, senior equity analyst at Morningstar highlighted that Netflix had posted its second-ever streaming subscriber net loss during the second quarter.

NVDA

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“Management expects to gain a million subscribers in the third quarter, well below our previous projection,” he added.

Who has better content: Netflix or Disney+?

In the streaming world content is king as its high quality and wide range attracts more subscribers. 

Both companies offer substantial libraries of entertainment that include original content. Netflix has more movies, but Disney+ markets itself as the home for Disney, Pixar, and Marvel fans.

However, while Netflix may have enjoyed pole position in the race, it’s pretty much lost it all now, partially because of loss of licences titles, according to AJ Bell’s Danni Hewson. 

“Back catalogues have been pulled back into other houses which have themselves become competitors. If you look at the long list of titles about to disappear from Netflix’s catalogue in the next few weeks you get a really clear picture of its problems,” she told Capital.com.

The increasing competition in the streaming marketplace has seen rivals reclaiming key titles from Netflix for their own libraries. The point was raised by research firm Digital i. 

“In the UK, Netflix still dominates the market, with approximately 14 million subscribers. Nevertheless, the king of streamers is increasingly under pressure as Disney+ begins to reclaim high-performing titles it had previously licensed to Netflix,” it stated.

The issue was recently analysed by Variety, the leading entertainment site, which warned that a “content crisis” could be triggered by Netflix’s loss of licensed titles. It highlighted the service’s recent loss in the US of ‘Criminal Minds’ to Paramount+.

In addition, a recent survey by Hub Entertainment Research revealed the 10 shows and franchises that were most likely to drive sign-up to TV platforms – and only two of them were from Netflix. 

Financial results

As far as Disney+ vs Netflix revenues are concerned, Disney’s Direct-to-Consumer revenues for the second quarter of 2022 increased 23% to $4.9bn, while operating losses increased $0.6bn to $0.9bn. 

The company’s statement attributed the increase in operating loss was due to higher losses encountered at Disney+ and ESPN+, as well as lower operating income at Hulu. 

“Lower results at Disney+ reflected higher programming and production, marketing and technology costs, partially offset by an increase in subscription revenue,” it stated. 

The streaming platform added 7.9 million subscribers in the first three months of 2022. 

While praising the increase in memberships, Morningstar’s Macker highlighted the operating loss for the firm’s direct-to-consumer segment, in which Disney+ sits.

“Disney continues to invest in content for its streaming services, including renegotiating contracts. Despite the elevated levels, we continue to view the content spending as an appropriate investment to drive long-term growth for the overall business,” the analyst wrote in a note.

Danni Hewson, financial analyst at AJ Bell, said that despite being a newbie in the streaming business Disney has “been able to harness its considerable brand magic to propel itself to number two in terms of numbers”. 

Crucially, she pointed out, it can afford to keep operating at a loss for the foreseeable future because of the diverse portfolio that makes up the whole business, including its theme park operations.

Meanwhile, for Netflix, streaming revenues are the company’s sole bread and butter. The firm reported second-quarter revenue growth of 9% year-over-year driven  by a 6% and 2% respective rise in average paid memberships and average revenue per membership.

In a letter to shareholders, the company acknowledged that reaccelerating revenue growth was a big challenge.

“We’re fortunate to be in a position of strength as the leader in streaming entertainment by all metrics (revenue, engagement, subscribers, profit and free cash flow). We’re confident and optimistic about the future.” it stated. 

Morningstar’s Macker noted the company’s intention to trail an ad-supported model early next year. 

“Even with the ad-supported plan trials projected to launch in early 2023, investors should remain cautious about the top-line impact of advertising in the next two to three years or so,” he said in a note.

Disney+ vs Netflix: Which stock will outperform?

No-one can deny the potential of these industry giants, but what are the streaming services stocks to buy, according to analysts?

Neil Macker, senior equity analyst at Morningstar, had a $170 fair value on Walt Disney and branded it as “interesting” based on its fiscal 2022 secon- quarter results. On Netflix, Macker had a fair value estimate of $280.

As of 4 August, Netflix had a consensus ‘hold’ rating, based on the views of 39 analysts compiled by MarketBeat, although opinion is divided. 

Eleven analysts saw the stock as a ‘buy’, six as a ‘sell’, with the remaining 22 classifying it as a ‘hold’. The consensus view, meanwhile, was that the share price could rise almost 38% to $312.71 over the coming year. 

The site had Disney as a ‘moderate buy’, based on the views of 24 analysts compiled by MarketBeat as of 4 August. Nineteen had ‘buy’ recommendations in place and five believed it’s a ‘hold’. 

Their consensus was that the stock could rise 41.5% over the next 12 months to $154.28. Even the lowest predictions suggested a 10% uplift to $120 from $109.02 at the market close on 3 August 2022.

Netflix was a “good long-term investment”, and Disney was “acceptable”, according to the algorithmic forecasts of Wallet Investor. The site had Disney rising 5.7% to $115.28 over the next 12 months and hitting $155.79 by July 2027, which would be almost 43% higher than its current level. 

Netflix, meanwhile, could be up 18% to $267.89 in a year’s time before soaring to $430.87 over the next five years to July 2027, according to Wallet Investor. That was 90% higher than the current $226.73 price. 

Note that analyst and algorithm-based price predictions can be wrong. Forecasts shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before trading. And never trade money you cannot afford to lose.

FAQs

Does Disney or Netflix have more content?

The overall picture is changing all the time. They both offer substantial libraries of entertainment that include original content. It depends on what you want to see. For example, Netflix has more movies, but Disney+ markets itself as the home for Disney, Pixar, and Marvel fans.

Is Disney a good stock to buy?

Whether DIS stock is a suitable investment for you will depend on your personal research, trading strategy and investment needs. You need to perform your own due diligence and decide if the stock meets your needs and appetite for risk. And never trade money you cannot afford to lose.

Will Netflix stock go up?

This will depend on a number of variables. It’s crucial to do your own research to form an opinion of a company’s performance and likelihood of achieving analysts’ targets. You must also remember that markets are volatile and past performance is no indication of future returns. And never trade money you cannot afford to lose.

 

Markets in this article

NFLX
Netflix Inc (Extended Hours)
633.47 USD
-6.66 -1.040%
DIS
Walt Disney Co (Extended Hours)
95.69 USD
-1.37 -1.420%

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