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Why Did Disney (DIS) & Netflix (NFLX) Stock Jump Monday?
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Shares of Disney (DIS - Free Report) and Netflix (NFLX - Free Report) surged Monday for completely different reasons. Yet their climbs highlight how important the streaming industry is and helps set up what will likely be years of comparison between the two media powers.
Disney
Disney saw its stock price jump nearly 2% Monday after Comcast (CMCSA - Free Report) officially outbid 21st Century Fox (FOXA - Free Report) to take control of European pay-TV titian Sky PLC. Comcast offered $22.59 a share—valued at $38.8 billion—which marked over a 40% premium to the cable and internet power’s February offer.
Comcast saw its stock price plummet Monday following the weekend auction conducted by UK regulators. The move is part of an ongoing fight to secure as many assets as possible as media houses fight to secure their futures amid a quickly shifting market geared toward streaming.
The interesting part for Disney investors is that the company owns a 39% stake in Sky through its purchase of key Fox assets. Disney’s deal with Rupert Murdoch’s firm will see Disney pay roughly $71 billion for Fox’s TV Studio and international properties, among other assets.
Some reports suggest that Disney and Fox might sell their portion of Sky to Comcast, but this remains up in the air for now. Meanwhile, the ownership of streaming giant Hulu is also influx. Disney is set to own a controlling 60% stake in Hulu through its Fox deal. Reports have now surfaced that say Comcast might consider selling its 30% stake in Hulu to Disney, giving Disney 90% ownership of the streaming platform—AT&T (T - Free Report) owns the remaining10%.
No matter what, Disney will soon own a controlling stake in one of Netflix and Amazon (AMZN - Free Report) Prime Video’s biggest competitors. Plus, Disney is expected to launch its own stand-alone streaming service at the of 2019. In doing so, Disney sets up what will likely be a fight between Netflix, Amazon, HBO, itself, and soon enough Apple (AAPL - Free Report) , for years to come.
Netflix
Moving on, shares of Netflix popped over 3% Monday as investors continue to be more optimistic about the streaming company roughly two months removed from its second-quarter financial results that sent many running. Monday’s climb comes after Guggenheim Partners analyst Michael Morris raised his NFLX price target to $420, which marked a roughly 15% premium compared to Friday’s closing price.
The analyst cited Netflix’s ability to add subscribers as a major reason for the new price target. “Netflix subscriber penetration will significantly exceed what is implied in the company's current valuation,” Morris wrote in a note to clients. “The Netflix offering is a substantial consumer value in price and utility, and an efficient model will continue to support a virtuous cycle of quality content creation, distribution, and monetization.”
Morris predicted that Netflix's subscriber base will more than double by 2023, to climb above 285 million. The analyst pointed to the firm’s ability to expand internationally as a major reason for his optimism. Plus, he said that the streaming company has a leg up on some of its competitors in terms of technology.
Lastly, Netflix is ready to expand beyond streaming after the company hired Christie Fleischer—from Disney—at the beginning of September to become the head of its global consumer products team. Fleischer will “lead a team focusing on developing the consumer products portfolio across all categories for Netflix original series and films,” according to a Netflix statement.
Looking Ahead, Netflix expects to add 650,000 subscribers in the U.S. and 4.35 million internationally in the third quarter. Meanwhile, our current Zacks Consensus Estimate is calling for the company’s Q3 revenues to surge by roughly 33.7% to reach $3.99 billion. At the other end of the income statement, Netflix is projected to see its adjusted quarterly earnings soar over 134% to $0.68 per share.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Why Did Disney (DIS) & Netflix (NFLX) Stock Jump Monday?
Shares of Disney (DIS - Free Report) and Netflix (NFLX - Free Report) surged Monday for completely different reasons. Yet their climbs highlight how important the streaming industry is and helps set up what will likely be years of comparison between the two media powers.
Disney
Disney saw its stock price jump nearly 2% Monday after Comcast (CMCSA - Free Report) officially outbid 21st Century Fox (FOXA - Free Report) to take control of European pay-TV titian Sky PLC. Comcast offered $22.59 a share—valued at $38.8 billion—which marked over a 40% premium to the cable and internet power’s February offer.
Comcast saw its stock price plummet Monday following the weekend auction conducted by UK regulators. The move is part of an ongoing fight to secure as many assets as possible as media houses fight to secure their futures amid a quickly shifting market geared toward streaming.
The interesting part for Disney investors is that the company owns a 39% stake in Sky through its purchase of key Fox assets. Disney’s deal with Rupert Murdoch’s firm will see Disney pay roughly $71 billion for Fox’s TV Studio and international properties, among other assets.
Some reports suggest that Disney and Fox might sell their portion of Sky to Comcast, but this remains up in the air for now. Meanwhile, the ownership of streaming giant Hulu is also influx. Disney is set to own a controlling 60% stake in Hulu through its Fox deal. Reports have now surfaced that say Comcast might consider selling its 30% stake in Hulu to Disney, giving Disney 90% ownership of the streaming platform—AT&T (T - Free Report) owns the remaining10%.
No matter what, Disney will soon own a controlling stake in one of Netflix and Amazon (AMZN - Free Report) Prime Video’s biggest competitors. Plus, Disney is expected to launch its own stand-alone streaming service at the of 2019. In doing so, Disney sets up what will likely be a fight between Netflix, Amazon, HBO, itself, and soon enough Apple (AAPL - Free Report) , for years to come.
Netflix
Moving on, shares of Netflix popped over 3% Monday as investors continue to be more optimistic about the streaming company roughly two months removed from its second-quarter financial results that sent many running. Monday’s climb comes after Guggenheim Partners analyst Michael Morris raised his NFLX price target to $420, which marked a roughly 15% premium compared to Friday’s closing price.
The analyst cited Netflix’s ability to add subscribers as a major reason for the new price target. “Netflix subscriber penetration will significantly exceed what is implied in the company's current valuation,” Morris wrote in a note to clients. “The Netflix offering is a substantial consumer value in price and utility, and an efficient model will continue to support a virtuous cycle of quality content creation, distribution, and monetization.”
Morris predicted that Netflix's subscriber base will more than double by 2023, to climb above 285 million. The analyst pointed to the firm’s ability to expand internationally as a major reason for his optimism. Plus, he said that the streaming company has a leg up on some of its competitors in terms of technology.
Lastly, Netflix is ready to expand beyond streaming after the company hired Christie Fleischer—from Disney—at the beginning of September to become the head of its global consumer products team. Fleischer will “lead a team focusing on developing the consumer products portfolio across all categories for Netflix original series and films,” according to a Netflix statement.
Looking Ahead, Netflix expects to add 650,000 subscribers in the U.S. and 4.35 million internationally in the third quarter. Meanwhile, our current Zacks Consensus Estimate is calling for the company’s Q3 revenues to surge by roughly 33.7% to reach $3.99 billion. At the other end of the income statement, Netflix is projected to see its adjusted quarterly earnings soar over 134% to $0.68 per share.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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