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In this article, we will take a look at the 10 best streaming stocks to buy now. You can skip our comprehensive analysis of these companies and go directly to the 5 Best Streaming Stocks to Buy Now.
The demand for the streaming industry continues to grow, given its ability to adapt to service repositories that are diverse enough to draw and maintain consumers. The COVID-19 further highlighted the success of the streaming industry, which experienced new patterns amidst the pandemic. According to consulting firm Deloitte, in an October 2020 survey, 76% of respondents mentioned they subscribe to at least one paying channel, up 21% from 2018. Consumers who pay for a premium online video channel have an average of five accounts, increasing from three before the pandemic.
The streaming industry has become a platform for consumer engagement both for content creation and connection of manufacturers to their consumers. An article published by the consulting firm Mckinsey mentioned that spending on streaming services increased at a compound annual rate (CAGR) of 33%. According to a study from Statista, Video Streaming (SVoD) is expected to generate revenue of $71.2 billion in 2021, with a compound annual growth rate (CAGR 2021-2025) of 11.04%, resulting in a market value of $108 billion by 2025.
Tech Giants and the Streaming Industry
Tech giants begin to adapt to the growing streaming industry. Major tech companies are spending heavily on their streaming platforms to capture the millions of users online hungry for original content.
For instance, one of Apple Inc.'s (NASDAQ:AAPL) newest product, Apple T.V. Plus, is an ad-free streaming program that includes a limited catalog of approved material, as well as several original shows and movies produced by Apple Originals. The number of subscribers increased from 33.6 million subscriptions at the end of 2019 to 40 million subscriptions in 2020. Apple Inc.'s (NASDAQ:AAPL) revenue for subscriptions, including Apple T.V. and Apple TV+ in the fourth quarter of 2020 came in at $14.5 billion. Apple Inc.'s (AAPL) net revenue in 2020 came in at $274.52 billion, up 5.51% from $260.17 billion in 2019. Shares of AAPL jumped 81% over the last twelve months.
Amazon.com, Inc. (NASDAQ:AMZN) also came up with a streaming media player platform, Amazon Fire T.V. The platform allows users to watch videos, listen to music, play games, and use other types of apps from the internet on T.V. In December 2020, the streaming service reached 50 million active users, up from 40 million at the start of 2020. In 2020, the company broke records with total revenue of $386 billion, up 38% or over $100 billion from income in 2019. Amazon.com, Inc. (NASDAQ:AMZN) has gained 51% over the last twelve months.
American multinational technology company Microsoft Corporation (NASDAQ:MSFT) released their corporate video-sharing service, Microsoft Stream, in 2017. The streaming platform allows users to upload, monitor, and exchange videos using an enterprise video service. In 2020, Microsoft Corporation (NASDAQ:MSFT) had a net income of $44.28 billion. Shares of MSFT jumped 44% over the last twelve months.
One of the biggest social networking sites, Facebook, Inc. (NASDAQ: F.B.) launched Facebook Live in August 2015. The streaming platform enables users to live stream events where viewers can view the show on their smart devices and communicate with their streamers through reactions, shares, feedback, and other social features. Facebook, Inc. (NASDAQ: F.B.) total revenue came in at $86 billion, up from $15.3 billion in 2019, mainly due to digital advertising.
Rise of the Streaming Industry during the COVID-19 pandemic
The streaming industry has become increasingly popular during the COVID-19 pandemic as stay-at-home orders caused a spike in streaming content consumption. According to Grand View Research's market research survey, the global streaming market was worth $42.6 billion in 2019. By 2027, it is projected to rise at a rate of more than 20% each year, reaching a total of $184.3 billion.
Streaming service Netflix (NASDAQ:NFLX) increased its user base to 28 million, with around 16 million engaging in the first three months of 2020 alone. The total number of Netflix (NASDAQ:NFLX) subscriptions is already at 200 million. The company broke records with its $25 billion in sales for the whole year of 2020. Netflix (NFLX) increased by 29.2% over the last twelve months.
One of the world's largest telecommunications companies AT&T Inc (NYSE:T) launched its HBO Max streaming service in May 2020. The company reported nearly 40 million U.S. customers in the first quarter of 2021. HBO Max will debut in 60 countries outside of the U.S. this year, including 39 Latin American and Caribbean territories in late June and 21 European territories in the second half. In 2020, AT&T Inc (NYSE:T)'s total revenue came in at $171.8 billion. Shares of T raised 6% over the last twelve months.
Warner Music Group Corp (NASDAQ:WMG)
Warner Music Group Corp (NASDAQ:WMG) has been in the industry since 1958. The company first publicly traded in the New York Stock Exchange from 2005 to 2011 and was later sold to Access Industries. In 2020, Warner Music Group Corp held its second IPO under NASDAQ at an IPO price of $25. Warner Music Group Corp (NASDAQ:WMG) net income in 2020 came in at $99 million, down from $122 million in 2019. Shares of WMG jumped 6% over the last three months.
Roku, Inc. (NASDAQ:ROKU)
If you're new to investing and looking for the best streaming stocks with huge upside potential, one of the best streaming stocks to buy now is Roku, Inc. (NASDAQ:ROKU). The streaming platform connects to the internet through your home network's wired or wireless link. Roku, Inc. (NASDAQ:ROKU) users download videos from the internet and watch them on their T.V. ROKU shares increased 175% over the last twelve months due to the burst in streaming activity. The company reported a total of 58.7 billion streaming hours in 2020.
The COVID-19 highlighted the streaming industry as a platform for manufacturers to advertise products and consumers' entertainment. The streaming industry will continue to thrive, given the high demand from its users. Just like the streaming industry, the hedge fund industry is also seeing winds of change. The entire hedge fund industry is feeling the repercussions of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn't keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey's research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter's stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017, and they lost 13% through November 16th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
With this context in mind, here is our list of the 10 best streaming stocks to buy now.
Best Streaming Stocks to Buy Now
10. CuriosityStream Inc (NASDAQ: CURI)
Number of Hedge Fund Holders: 11 Total Value of Hedge Fund Holdings: $16.0 Million
We start our list of the 10 best streaming stocks to buy now with CuriosityStream Inc. (NASDAQ:CURI). The Maryland-based media and entertainment company offers documentaries, TV shows, and short video content to over 13 million subscribers. In 2020, the company's user base increased by 23% from its 10.5 million subscriptions in 2019. In the same year, the company entered into a partnership with TataSky to allow hours of documentary films and shows to audiences across India.
CuriosityStream Inc. (NASDAQ:CURI) has a market cap of $803 million and posted a revenue of $39.6 million in 2020. By the end of 2021, the company is targeting at least $71.0 million in revenue. Shares of CURI surged 56% over the past twelve months.
There were 11 hedge funds that reported owning stakes in CuriosityStream Inc. at the end of the fourth quarter, down from 19 funds a quarter earlier. The total value of these stakes at the end of Q4 is $16.02 million.
9. Tencent Music Entertainment Group (NYSE: TME)
Number of Hedge Fund Holders: 26 Total Value of Hedge Fund Holdings: $826 Million
Tencent Music Entertainment Group (NYSE:TME) ranks 9th in our list of 10 best streaming stocks to buy now. The Chinese entertainment platform has over 56 million paying users in 2020, up 40.4% year-over-year. The company recently entered a partnership with GMM Grammy, a Thailand record and publishing company to tap into the larger potential of the music industries in China and Thailand.
Tencent Music Entertainment Group (NYSE:TME) has a market cap of $29.1 billion. The company's revenue in 2020 came in at $1.28 billion, up 14.3% year-over-year. The rise was primarily due to increased subscription and advertising revenue. Shares of TME climbed 61% over the past twelve months. In March, China Renaissance downgraded Tencent Music Entertainment Group to Hold with a price target of $29.
There were 26 hedge funds that reported owning stakes in Tencent Music Entertainment Group (TME) at the end of the fourth quarter. The total value of these stakes at the end of Q4 is $826 million.
8. iQIYI, Inc. (NASDAQ: IQ)
Number of Hedge Fund Holders: 30 Total Value of Hedge Fund Holdings: $1.04 Billion
Ranking 8th in our list of the 10 best streaming stocks to buy now is iQIYI, Inc. China-based iQIYI, Inc. was founded in 2010 by internet search engine company, Baidu (NASDAQ:BIDU). iQIYI, Inc. is an online video platform with over 500 million active users. In May 2021, the company entered a partnership with the Philippine television and radio network, GMA Network. Subscribers of iQiyi in the Philippines can now stream the latest episodes of some of the newest GMA Network shows on the iQiyi app or iQ.com within 24 hours of them airing on TV.
iQIYI, Inc. (NASDAQ:IQ) has a market cap of $11.8 billion. iQIYI, Inc.'s revenue in 2020 came in at $1.1 million. Shares of IQ decreased 8% over the past twelve months. Credit Suisse upgrades QI to Neutral with a $17 price target.
There were 30 hedge funds that reported owning stakes in iQIYI, Inc. at the end of the fourth quarter up from 18 funds a quarter earlier. The total value of these stakes at the end of Q4 is $1.04 billion.
7. FuboTV Inc. (NYSE: FUBO)
Number of Hedge Fund Holders: 31 Total Value of Hedge Fund Holdings: $493 Million
New York-based streaming television service Fubo TV Inc. (NYSE:FUBO) ranks 7th on the of 10 best streaming stocks to buy now. The company was founded in 2015 focusing on channels that broadcast sports and news among others. In 2020, the company had a total of 547,880 subscribers, up 37% year-over-year. Fubo TV Inc. has a market cap of $2.77 billion. The company's revenue in the third quarter of 2020 came in at $61.2 million, up 47% from 2019. Shares of FUBO jumped 96% over the last twelve months. In March, Oppenheimer maintained an Outperform rating in FuboTV, Inc. and lowered the price target to $35.
There were 31 hedge funds that reported owning stakes in Fubo TV Inc. at the end of the fourth quarter. The total value of these stakes at the end of Q4 is $493 million.
Greenlight Capital said that FUBO proposes to make money mainly from advertisements and streaming sports betting in its Q4 2020 investor letter:
“FuboTV (FUBO) is a streaming service that offers a sports-focused “skinny” bundle of TV channels that also includes a variety of news and entertainment content. Essentially, this is the type of package that Apple unsuccessfully tried to assemble for years. While FUBO does not currently achieve the gross margins that Apple reportedly sought, FUBO expects to primarily earn profits on advertising and online sports wagering. Our average effective price (we owned shares and warrants) was $5. The shares surged from the $10 October IPO price to end the year at $28. The huge move brought to light a number of bear cases that we believe misapprehend FUBO’s lucrative opportunity in online sports wagering.
The bears contend that the sports wagering market is small and FUBO won’t be able to compete with established books like William Hill or Caesars Entertainment. To the extent that sports wagering is a bet on who wins a game and by how much, we agree. However, we perceive the integrated opportunity to be qualitatively different. What if you could bet 1:2 on whether Giannis will make the next free throw, 1:3 on whether Jacob deGrom’s next pitch will be a strike or 20:1 that Aaron Judge will homer on the next at bat? One could even bet on whether Tiger will make his next putt or whether Nadal’s next serve will be an ace. Suddenly, watching sports goes from being a passive experience to a highly engaging, active one. Higher engagement leads to higher ad revenues and the ability to make other in-app sales to players. We expect the software to launch in 2021, initially for play money and later with the benefit of regulatory licenses for real money. We think the right comparison will be to video gaming companies such as Take-Two Interactive Software or Activision Blizzard rather than other over-the-top (OTT) video providers.”
6. Spotify Technology S.A. (NYSE: SPOT)
Number of Hedge Fund Holders: 48 Total Value of Hedge Fund Holdings: $2.68 Billion
Sweden-based music streaming company Spotify Technology S.A. (NYSE:SPOT) ranks 6th in our list of the 10 best streaming stocks to buy now. Spotify Technology S.A. offers commercial-free music and ad-supported services to over 155 million paying subscribers. Spotify Technology S.A. (NYSE:SPOT) has a market cap of $47.2 billion. The company's revenue in the full year 2020 came in at $2.61 billion. Shares of SPOT surged 70% over the past twelve months. On May 2, Pivotal Research set a $340 price tag on Spotify Technology SA (NYSE:SPOT). Pivotal Research analyst Jeffrey Wlodarczak upgraded Spotify from a Hold to a Buy ranking.
There were 48 hedge funds that reported owning stakes in Spotify Technology S.A. at the end of the fourth quarter, up from 4 funds a quarter earlier. The total value of these stakes at the end of Q4 is $2.68 billion.
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Disclosure: None. 10 Best Streaming Stocks to Buy Now is originally published on Insider Monkey.