Who is the best dog in streaming?
While Nielsen’s “Tops of 2020” report highlighted Netflix’s starring role in both original and acquired TV series, a newcomer is making a splash on the streaming front: Disney.
Nielsen said that seven of the 10 most popular movies of last year were viewed on Disney +, which launched in November 2019.
The overall audience has undergone a slight change, according to the market research firm, with Netflix taking up only 28% of streaming time – up from 31% in 2019 – and Disney + accounting for 6%.
“There is room for both” in the industry since “their prices aren’t extreme,” said Quint Tatro, founder and chief investment officer of Joule Financial.
“I have three kids. We’re not canceling either,” he told TBEN’s “Trading Nation” Wednesday. “From an investment standpoint, it’s all about valuation. And I just can’t touch Netflix here.”
Netflix’s nearly 3% rise on Wednesday lifted the stock to an almost 86-fold price-to-earnings ratio, and with its debt climbing to 1.5 times its equity, “it’s just not a engaging game, ”Tatro said.
“If we had a significant drop in that name where everyone suddenly threw it out and said, ‘Oh they’re dead’ – let’s say there was a new player in the game or something – maybe being that you can pick stocks But that’s just not a touch for me, ”Tatro said.
While Disney didn’t initially get the credit it deserved from Disney +, the action has had an “incredible comeback” since the March lows, Tatro added.
“We own the shares. We were rewarded for owning the shares. We bought near the March lows. I’m very happy with it all,” he said.
But with Disney trading at 40 times futures earnings on Wednesday, “that’s the one that also needs to come in,” Tatro said. “So I think there is room for both. … Longer term I think Disney is the play because they have more than streaming, but you have to be patient. Next fix , it’s on the shopping list. That’s when you collect stocks. “
TradingAnalysis.com founder Todd Gordon agreed it was possible to have the best of both worlds, saying investing in streaming shouldn’t be “either-or”.
Still, Disney stocks have shown remarkable momentum over the past year, Gordon said, referring to a chart.
“Could you see yourself taking a bet at the low of Covid, knowing the country was going to be shut down, that Disney … would be ahead of Netflix in payout percentage?” Gordon said.
Disney’s stock has risen more than 104% since its March low, while Netflix has gained nearly 70%.
“You can counter and say, ‘Well, Disney fell again,’ but if you look at the breakout of both stocks, they’re both about 20% of highs,” Gordon said. “So I don’t think it’s neither nor. They serve two [demographics]. “
Disclosure: Joule Financial owns shares of Disney.