Streaming services are not a new notion; Netflix and Hulu have been for many years. As corporations like Apple and Disney have entered this industry in recent years, competition has intensified. Additionally, the COVID-19 epidemic enhanced the global demand for excellent streaming material. Globally, the streaming industry is seeing rapid expansion. As more ditch cable, it is probable that this tendency will continue. Streaming video and music is rising in popularity with consumers, as is investing in these stocks and shares. This is due to the fact that it is a highly convenient means of entertainment and information medium. As a result, streaming stocks and shares have increased dramatically over the past decade.
What are streaming service stocks?
Streaming stocks are stocks of firms that specialize in streaming as an entertainment medium. During the epidemic, video streaming sites experienced a considerable increase in consumption. During lockdowns, folks sought something to pass the time. And when rivalry intensified, it gave rise to what is now known as the streaming wars.
Streaming provides users with a number of benefits, most notably convenience. Individuals and groups of friends and family may become subscribers and watch their favorite shows at any time, from any location, on any smart device. With the flexibility to pick and choose amongst services, users may select and pay for only the desired content. This provides a substantial advantage over conventional TV systems such as cable.
While many like to group these businesses together, they actually fall into two distinct categories:
Live Streaming — These businesses provide internet entertainment and information in real-time. Here, there is no pre-recorded content. When they are manufactured, they are delivered simultaneously, such as at a football game. Live stream reaches all audiences as long as their smart device is connected to the live stream platform and has an internet connection. YouTube and Tik Tok Live are examples of live streaming companies.
On-Demand is the antithesis of live streaming. These companies give their subscribers entertainment that may be seen at any time. Typically, individuals may pay for them with a debit or credit card through a subscription model. However, recent business trends have led to the emergence of ad-supported platforms. Among the streaming stocks in this category are Netflix, Roku Inc, Amazon Prime Video, Paramount Global, and Disney+.
What is the current market share of streaming services?
The streaming market is competitive, and the dominant company frequently changes. In 2002, Netflix debuted as a small-budget corporation, selling shares on the stock market for only $15. This was a time when physical rentals from Blockbuster and other companies were the primary way of home entertainment. Amazon Video developed an on-demand service at the same time as Netflix, causing both firms to fight for a global streaming service.
Over-the-top media services (OTT) are Internet-accessible streaming services. Video streaming is typically conducted on smart TVs, tablets, mobile phones, and desktop PCs, among other devices. OTT services bypass traditional cable and satellite TV access methods and are significantly easier and quicker to view online. As a result of their current popularity, home entertainment may supply a wealth of attractive assets for trading, and streaming services currently occupy a major position in the financial markets.
In recent years, there has been a significant increase in streaming platforms, where television is broadcast not just to TV boxes but also to mobile applications, tablets, and smart TVs. In order to reach a larger audience, the majority of businesses provide 30-day samples of their platforms. Google, Apple, and Disney have now developed their own streaming services, in addition to market-leading but smaller-scale competitors like Sky Cinema, Amazon Fire TV, and HBO Max.
Large-cap stocks are typically viewed as more trustworthy and stable during times of political, social, or economic uncertainty since they strive for consistent and steady cash flow and balance sheets over the long term. Before starting a position in a streaming stock, traders frequently conduct this sort of company analysis since examining how the firm maintains its value through difficult times is crucial.
What are the most significant dangers and obstacles for streaming service stocks?
Investing involves risk, and streaming service stocks are no exception. With that in mind, let’s examine the biggest threat this stock market sector confronts.
As additional platforms join the market, these services’ distinctiveness is gradually diminishing. Consequently, streaming shares must invest significant cash in creating unique material that may or may not be favorably accepted to maintain subscribers.
Attractive Pricing — With so many new platforms entering the market, it is getting increasingly difficult to boost membership costs. Moreover, while inflation is now on the rise, some members have been canceling their memberships in order to save money.
Cybersecurity – Although it is rarely acknowledged, streaming platforms acquire a great deal of information about their customers, particularly those who are financed by adverts. However, should this information become exposed due to a breach in cyber security, it might facilitate phishing and identity theft.
Limelight Networks, Inc. (NASDAQ: LLNW)
Limelight Networks, Inc. (NASDAQ: LLNW) is a content delivery network firm that provides Disney and NBC with backend streaming technology. Limelight Networks, Inc. (NASDAQ: LLNW) is well-positioned to thrive in the next years as a CDN stock as these streaming titans continue to generate more content and increase their viewership. As of May 18, the company’s stock price has increased 14.26 percent over the last year and 10.28 percent over the past six months.
On April 28, Raymond James analyst Frank Louthan maintained a ‘Strong Buy’ rating on Limelight Networks, Inc. (NASDAQ: LLNW) shares, noting that investors have an attractive buying opportunity if they are willing to focus on the company’s underlying fundamental performance and disregard temporary supply-chain issues and uncertainty surrounding the company’s Ukrainian operations.
In March, Limelight Networks, Inc. (NASDAQ: LLNW) agreed to buy Yahoo’s Edgecast, security, content delivery, and video services, provider. The $300 million all-stock transaction is anticipated to improve sales and the company’s worth in the coming months.
Limelight Networks, Inc. (NASDAQ: LLNW) reported -$0.04 EPS for the first quarter of 2022, in line with market predictions. The quarterly revenue of $57.96 million exceeded projections by $1.81 million and increased by 13.21 percent compared to the same period last year.
At the end of Q4 2021, 11 hedge funds tracked by Insider Monkey owned holdings in Limelight Networks, Inc. (NASDAQ: LLNW) worth a total of $119.5 million. This is an increase from the previous quarter when ten hedge funds held holdings in the firm worth $95 million. At the conclusion of the first quarter of 2022, Lynrock Lake was the top shareholder in Limelight Networks, Inc. (NASDAQ: LLNW), with 3.45 million shares worth $18.06 million.
Limelight Networks, Inc. (NASDAQ: LLNW) is a top streaming stock to purchase with Netflix, Inc. (NASDAQ: NFLX), Amazon.com, Inc. (NASDAQ: AMZN), and The Walt Disney Company (NYSE: DIS).
Netflix, Inc (NFLX)
Netflix is the world’s top supplier of streaming video on demand. The streaming service offers a huge selection of films, documentaries, and television programs in several languages. The firm acquires content for distribution and also creates unique, original content for subscribers. Netflix has been one of the world’s best-performing stocks over the past two decades. The share debuted in 2002 at about $1.15 and today trades for over $500, representing a gain of nearly 48,000 percent.
Netflix has more than 200 million subscribers worldwide, including 74 million in the United States. Previously, expansion was funded by the issuance of additional shares. The firm currently anticipates positive cash flow and will no longer require additional capital from investors. Annual sales are currently approaching $25 billion. This provides the corporation with a large budget for producing original content and positions it to win the streaming battles.
In addition, Netflix aims to initiate a stock repurchase program that will strengthen the stock price. The danger is the stock price. The trailing earnings multiple for Netflix is 94, while the sales multiple is 9.4. This would render the stock susceptible to a slowdown in profits growth or an increase in market volatility.
Disney is maximizing the monetization of its huge content collection, which it has amassed during a century of business. The company’s three primary services are currently Disney+, ESPN+, and Hulu, which may be packaged for $13 per month. The combined services provide an assortment of original Disney programming, professional sports, and licensed material from other parties.
Disney+ is the company’s flagship service, which debuted in November 2018, a little over a year ago. As of Disney’s investor day in December, the service had already amassed 86.8 million subscribers, exceeding both expectations and analyst estimates. In addition to historic Disney series and films, the majority of the family-friendly programming acquired from 20th Century Fox can be found here.
ESPN+, Disney’s over-the-top (OTT) sports product, is positioned as a supplement to the cable ESPN channels and includes programming independent from major professional sports (which are offered as an add-on). Included sports options include UFC, rugby, cricket, and golf, while unique programming includes shows such as Detail, which showcases sports commentary from a variety of top players, ESPN FC, which focuses on soccer, and NFL PrimeTime.
Hulu: Hulu began as a joint venture in 2007 and became a wholly owned subsidiary of Disney after a series of mergers and stake acquisitions. The platform features a variety of third-party material as well as some original programs. Live TV is also available, which costs $54.99 a month and is billed as a cable subscription alternative.
In conclusion, we will examine the up-and-coming streaming service FuboTV. Simply put, the organization stands out as a live sports television streaming platform. FuboTV enables its clients to view content on SmartTVs, mobile phones, tablets, desktops, and streaming devices. Thus, subscribers will have access to tens of thousands of live athletic events on a single platform annually.
Fubo Gaming announced the introduction of the Fubo Sportsbook in Arizona last week. This is the second state in which the market-leading sportsbook is accessible. Thus, sports fans may now gamble on thousands of live professional and collegiate competitions. Fubo Sportsbook is more than simply a betting platform; it also intends to address the rising desire for interaction among American sports fans through an industry-first integration.
Investors should also be aware that the business has completed its acquisition of Molotov SAS, the leading live TV streaming provider in France. The synergy between the two organizations will take them to the next level by harnessing their respective talents to enhance the scalability of both business models.
ViacomCBS is becoming a formidable contender in the streaming battles. The business introduced Paramount+, a renamed and reimagined version of CBS All Access with a massive collection of film and television-related material. Viacom had previously struggled to adjust to the changing media world. Recent shares in the company’s stock from $20 to $100 can be attributed to the increasing popularity of its streaming service. The failure of Bill Hwang’s Archegos Capital Management in March precipitated a precipitous decline in the share price of Viacom, as banks dumped millions of Viacom shares. This forced selling has reduced the price of Viacom to about $40, providing a second opportunity to invest in the cable behemoth as it continues its metamorphosis into the streaming industry’s leader.
Discovery is a worldwide media corporation. The firm delivers content across numerous distribution platforms, ranging from direct-to-consumer (DTC) subscription packages to pay-television (pay-TV). Among the brands in the company’s portfolio are Discovery Channel, Food Network, Animal Planet, and Travel Channel.
The European Commission has granted unconditional antitrust approval for the acquisition of AT&T’s (NYSE: T) WarnerMedia unit, and the firm said last week. Clearly, this is a significant step in establishing Warner Bros. Discovery. It will be one of the world’s leading investors in premium content and a renowned entertainment firm.
In addition, Discovery and SiriusXM (NASDAQ: SIRI) also announced that they are forming a partnership. SiriusXM’s Platinum VIP subscribers will receive a 12-month subscription to discovery+, while other SiriusXM subscribers will receive three months of discovery+. The corporation intends to provide consumers with more value and options with membership plans that feature the greatest content from both firms.
Roundhill Streaming Services & Technology ETF (SUBZ)
The exchange-traded fund (ETF) Roundhill Streaming Services & Technology ETF is our next option and invests in international streaming services.
SUBZ, which has 40 holdings, began trading in February 2021. The fund’s top 10 holdings represent 42% of its $18.1 million in net assets, compared to the FactSet Segment Average of 57.03%. In other words, the fund is modest and very young.
In terms of sub-sectoral breakdown, the Video streaming sector accounts for the largest share at 40.7%, followed by the Technology sector at 22.0% and the Audio Streaming sector at 13.5%.
Disney (NYSE: DIS) is the largest holding with a 6.26 percent stake, followed by Discovery (NASDAQ: DISCA) with a 4.62 percent stake. Meanwhile, audio streaming provider Spotify Technology (NYSE: SPOT) is in the third position with a 4.45% market share, followed by media and technology company Comcast (NASDAQ: CMCSA) at 4.44 and media and entertainment businesses ViacomCBS (NASDAQ: VIAC) at 4.40.
The ETF is presently trading around $8.30, down more than 15% year-to-date. Since the beginning of 2022, a huge number of portfolio holdings have fallen prey to the shifting market mood toward growth shares. Nevertheless, buy-and-hold investors may discover the value at current prices.
At the time of writing, Tezcan Gecgil had no holdings (directly or indirectly) in the securities discussed in this article. These thoughts are those of the author and are subject to the InvestorPlace.com Publishing Guidelines.
Tezcan Gecgil has over two decades of investment management experience in the United States and the United Kingdom. In addition to formal university education in the industry, she has also completed all three levels of the Chartered Market Technician (CMT) test. Her interest is trading options based on the technical analysis of fundamentally sound firms. She particularly loves arranging weekly income-generating covered calls.
Comcast Corporation (NASDAQ:CMCSA)
Next on our list of the best streaming stocks to purchase today is Comcast Corporation (NASDAQ: CMCSA). It delivers cable and broadband services to millions of customers across the United States and video streaming services via its Xfinity Stream platform, which had about 18 million subscribers by the end of 2021.
On April 29, Benjamin Swinburne of Morgan Stanley maintained an ‘Overweight’ rating on Comcast Corporation (NASDAQ: CMCSA) shares but dropped his price objective for the stock from $60 to $55. He believes that the company’s free cash flow, EBITDA, and earnings per share are growing at a reasonable rate, despite its severely discounted prices. Comcast Corporation (NASDAQ: CMCSA) is the analyst’s top choice in the cable/satellite sector.
At the end of the fourth quarter, 80 hedge funds disclosed bullish wagers worth a total of $8.6 billion on shares of Comcast Corporation (NASDAQ: CMCSA). During the prior quarter, 75 hedge funds were long the company’s shares.
Comcast Corporation (NASDAQ: CMCSA) generated $31.01 billion in quarterly sales for the first quarter of 2022, above expectations by $602.5 million. Earnings per share were $0.86, beating analysts’ expectations by $0.05.
Spotify Technology S.A. (SPOT)
In addition to the tremendous growth of video streaming, music streaming is also expanding rapidly. Recent statistics indicate that Spotify’s premium user count has reached 172 million, doubling from 2017.
Spotify is the largest worldwide streaming firm with a 31 percent share of the music streaming market, and it is leveraging its market dominance to expand its product offering, beginning with paid advertising programs to promote new artists, which have the potential to be highly profitable. Additionally, the corporation is becoming a significant podcast player, which experts predict will give it greater clout in its dealings with the major record labels over royalties.
Wall Street forecasts that Spotify’s earnings will increase by 137.8 percent annually over the next five years, notwithstanding the stock’s recent decline due to market circumstances and conflicts over the content.
These three streaming services appear to possess all the necessary components to continue gaining market share. However, these stocks are volatile, so be careful to establish your stop-loss triggers before investing in them. The stop-loss level for the majority of investors should be around 30 percent.
Apple (NASDAQ: AAPL)
Apple is recognized as a tech stock, but in November of 2019, it debuted its own streaming platform.
Apple TV+ is presently accessible via its app and website in more than 100 countries.
The firm rapidly extended its repertoire to include a variety of genres, including science fiction, thriller, family, and humor. There are also a variety of documentaries and films accessible.
Although Apple TV+ has not achieved the same meteoric success as Disney+, it still has great promise.
Apple’s revenue for the first quarter demonstrates that its original content has captivated viewers.
The stock’s price has risen steadily over the past year, and this trend is expected to continue. Currently might be a good moment to invest in Apple, and this IT behemoth is anticipated to continue its steady rise over time.
Tencent Music Entertainment Group (TME)
Tencent Music is the last option for growth investors. This streaming service hopes to be the Chinese Spotify, and early results indicate that it is a resounding success. Tencent Music handles three of the top five music applications in China and provides additional features like karaoke in addition to playing music. It features a mixed business plan, generating money via memberships, advertisements, and live-streaming. Since 2017, total yearly income has skyrocketed from $600 million to $4.5 billion. Tencent Music already produces substantial operational profits. However, shares were recently decimated as a result of Archegos Capital Management’s collapse last month. The price of TME stock fell from $30 to $17 and has rarely recovered since then. This values Tencent Music at about 27 times predicted earnings for 2022 and 20 times projected earnings for 2023 for a company with yearly sales growth in excess of 20%.
How to Invest in Streaming service Stocks
Here are a few suggestions for beginning as an investor in streaming companies:
Step 1: Locate a streaming stock
You can select from the streaming stocks provided in this post or conduct your own research. I personally feel that keeping track of one’s spending patterns might provide investing inspiration.
For instance, I subscribe to Netflix. Therefore I also purchased the stock. This straightforward investment method is known as “Investing in what you know.” Examine your spending patterns and determine if you utilize any of the following streaming services. This may be a fantastic beginning place for generating investment ideas.
Step 2: Analyze the company
When examining streaming firms, I usually search for key data such as revenue growth, user growth, strong profit margins, and total streaming hours.
Step 3: Buy the stock
Investing in streaming stocks requires a stock brokerage account.
The epidemic reinforced streaming networks as the preferred method for people to view their favorite television programs. Even when normalcy returns, consumers continue to flock to streaming services for fantastic programs. Streaming has become a fundamental part of our society and is unlikely to continue in the foreseeable future. If you’re interested in investing in the internet streaming market, you should investigate what these firms do and how their stocks have performed previously.