Are Streaming Stocks Poised For Huge Growth This Quarter?
The coronavirus pandemic and the “stay-at-home” orders have been benefiting video streaming stocks. The demand for home entertainment has been soaring despite the reopening of the economy. After all, we can’t expect people to head out straight away, as some people are still afraid of catching the virus.
The year 2020 hasn’t been kind to anyone. From breaking 2 million confirmed cases and worrying unemployment rate to broader US-China trade tensions. The economic downturn we are seeing right now could stay a little longer than we have expected. But that’s not a bad thing for streaming providers. In fact, it could possibly drive more subscribers away from traditional pay-TV and toward streaming. The absence of live sports on Disney’s (DIS Stock Report) ESPN and other channels is likely to push viewers to cut the cord. Similarly, a recession could have a similar impact, causing consumers to trim non-essential purchases like cable.
Satellite TV’s Pain is Video Streaming Stocks’ Gain
The fallout from the pandemic and the recession is already starting to impact traditional players. Satellite TV operator DISH Network (DISH Stock Report) is in the midst of reshuffling its staff and re-evaluating its business. The loss of subscribers to cord-cutting is a scenario that was slowly happening before the pandemic. Since then, the process of converting to wireless video streaming players sped up significantly. Unless the traditional rivals offer a more competitive price range and up-to-date content, there’s not much reason not to follow the cord-cutting phenomenon.
Video streaming stocks are on fire right now and the trend is likely to continue for some time. With that being said, will you still consider adding these video streaming stocks to your watchlist?
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Roku Stock Jumped On Google Acquisition Rumors
Shares of Roku (ROKU Stock Report) grabbed investors’ attention again on Tuesday, rising 12.39% for the day. This came after rumors of Alphabet (GOOGL Stock Report) wanting to acquire Roku. To set things straight, there’s no supporting evidence to this news. Officially, Alphabet hasn’t expressed interest in Roku, and Roku is not putting itself up for sale as of Tuesday.
Roku’s performance has been respectable since bottoming out three months ago. The stock has seen 86% gains since the sell-off. Roku makes the cut as one of the best stocks to watch because the online streaming platform is built to survive whatever will trigger the next market sell-off. For instance, a spike in coronavirus cases could lead to an uptick in ROKU stock. If the broader economy goes into a deeper recession, Roku will act as a great way for consumers to save money by cutting the cord with their cable and satellite television providers. With that in mind, could Roku stock be presented as a smart all-weather play?
Is Netflix Stock Still A Buy At Current Valuation?
One of this year’s more compelling comeback stories is Netflix (NFLX Stock Report). The streaming giant has been one of the undisputed beneficiaries of the widespread stay-at-home orders due to the Covid-19 pandemic. During the pandemic, Netflix saw its subscriptions spiking along with other competitors such as Disney+. As lockdowns are beginning to ease, many are worried that it could cause decreased viewership that will ultimately cause consumers to unsubscribe. However, Bank of America Merrill Lynch analyst Nat Schindler thinks there’s more upside for the company.
His theory? Many sporting events, movie premiers, concerts and other big events are not coming back anytime soon. Schindler argues that Netflix’s subscriber growth will remain strong in the coming months. That’s one side of the story of course. There’s definitely bullish momentum as we close out the first half of 2020, but there are also some experts who are concerned with how the second quarter will pan out.
After an astonishing first quarter with 15.77 million new subscribers, could the forecast of 7.5 million new subscribers in the second quarter be realistic? While we cannot be sure of the exact churn rate in this quarter, it is helpful to know the approximate number so that investors can have a better grip on their NFLX stocks. The churn rate is an important consideration because the streaming giant recorded a higher churn rate last month. Valuation concerns are also valid. As we close out the second quarter of 2020, would NFLX stock be the top tech stock to buy right now?