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The Zacks Analyst Blog Highlights: Disney, Netflix, Apple, Roku and Amazon

Zacks Equity Research

For Immediate Release

Chicago, IL – November 15, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Disney DIS, Netflix NFLX, Apple AAPL, Roku ROKU and Amazon AMZN.

Here are highlights from Thursday’s Analyst Blog:

Disney, Apple Join Streaming Wars: Will This Hurt Netflix?

Disneyshares surged 7.4% following the launch of its streaming service Disney+ on Nov 12. Per the company, the service gained more than 10 million subscribers in 24-hours’ time.

With the arrival of Disney+, competition is expected to steam-up in the subscription-based video streaming space. This was evident from the share price movement of Disney’s streaming service peers since Disney+ was rolled out.

While Disney’s shares surged, dominant provider Netflix lost 3%. Although shares of Roku and Apple appreciated 5.2% and 1%, respectively, the companies underperformed Disney.

Disney, Apple and Roku’s shares have rallied 35.6%, 67.6% and a whopping 364.6%, respectively, on a year-to-date basis, while Netflix and Amazon’s shares have underperformed the market’s return of 22.1%.

Will Pricing War Take a Toll on Streamers?

Disney+ comes in at a competitive price compared with both Netflix and the recently-released Apple TV+.

While Disney+ costs $6.99 per month, the company is also offering a bundle package of Disney+, ESPN+, and ad-supported Hulu for $12.99 a month. This alone is anticipated to be a game changer in the streaming service space.

However, it would be foolish to ignore Apple’s aggressive pricing strategy for Apple TV+. At $4.99 per month, it has undercut the pricing of every other streaming service provider.

Established players like Netflix and Amazon, as well as new entrants like Disney+, NBCUniversal’s Peacock and HBO Max are expected to face a difficult time keeping up with Apple TV+’s rock-bottom pricing.

Moreover, HBO Max, set to be introduced in May 2020 at $14.99 a month, is lesser by $1 than Netflix’s costliest plan.

Meanwhile, Amazon Prime Video costs $8.99 a month, while Prime members, paying $12.99 per month for shipping and shopping deals, receive services inclusive of both.

The lower prices will surely make it difficult for users to select an appropriate service for their video streaming appetite. However, the cut-throat price competition is expected to be detrimental to finances of companies like Netflix. Notably, the streaming giant has a content obligation of almost $19 billion in its balance sheet.

Netflix in a Fix

Although Netflix is still the largest streaming player globally, lack of content from Disney’s Marvel-Pixar hits is expected to hurt its ability to add subscribers globally.

Moreover, competition to gain exclusive rights to classic TV shows has intensified among streaming-service providers and might hurt Netflix.

Hulu has grabbed the rights to ER. Disney, Amazon Prime and HBO Max secured rights to The Simpsons, Sex and the City, and Friends and The Big Bang Theory, respectively. In the meantime, Peacock acquired exclusive rights to The Office.

This apart, the entry of Disney and Apple is expected to hurt Netflix’s ability to gain shares, particularly in the price-sensitive Asia-Pacific markets.

Additionally, Apple’s robust original content portfolio for Apple TV+ that includes shows of different genres like See, The Morning Show, Dickinson, For All Mankind and The Elephant Queen is a key catalyst.

Disney+ also features old and new content from its namesake brand, Pixar, Marvel, Star Wars, National Geographic, and others.

Per a Reuters report, the 10 million sign-ups on the very first day of Disney+ streaming highlight its consumer demand. Disney+ is expected to have between 60 million and 90 million subscribers globally by the end of fiscal 2024.

Furthermore, Netflix is expected to produce more original shows, in a bid to retain its market share amid stiff competition, which, in turn, is likely to escalate its content cost in the near term. Notably, the company is expected to spend $15 billion by the end of this year.

Meanwhile, Netflix recently struck a multi-year deal with Viacom’s division — Nickelodeon — to produce original animated movies and series for the streaming giant based on the kids television network's library of characters as well as new IP.

Disney+ to Enjoy an Upperhand

Disney’s last-minute decision to make its latest service available on Amazon Fire devices was a vital bailout for Amazon. Amazon Fire’s competitor, Roku, already had access to Apple TV+ and Disney+. Disney’s strategic decision will not only give Amazon an edge over Roku, it will also boost penetration ability of the former.

Zacks Rank

Disney, Apple, Netflix, Roku and Amazon currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Click to get this free report The Walt Disney Company (DIS) : Free Stock Analysis Report Netflix, Inc. (NFLX) : Free Stock Analysis Report Amazon.com, Inc. (AMZN) : Free Stock Analysis Report Apple Inc. (AAPL) : Free Stock Analysis Report Roku, Inc. (ROKU) : Free Stock Analysis Report To read this article on Zacks.com click here.