3 Top Streaming Stocks To Buy [Or Avoid] In Q4 2020
There’s no question that the coronavirus pandemic has been benefiting streaming stocks immensely. The coronavirus has all but shut down in-person forms of entertainment. This caused most consumers to switch toward streaming services, which they can enjoy in the comfort of their own home. In fact, the red hot rally among top streaming stocks has seen some strong action in their stock prices recently.
The question here is, though, is whether investors should chase the high valuation or wait until the stocks take a breather. Typically, a strong rebound will lead to multiple corrections along the way before they set another record high. We saw one correction this month, will there be another one along the way? Your guess is as good as mine. The tech sell-off we saw starting September dragged most tech stocks down, and streaming stocks are not spared. But if you see the coronavirus pandemic as a catalyst for meaningful long term investment in video streaming stocks, read on.
Disney Stock Emerge As The Winner Among Streaming Providers
With theme parks, movie theaters, and cruises all closing, it’s not too surprising to see Disney (DIS Stock Report) plunged into the red. But don’t discard DIS stock off your watchlist just yet. While the novel coronavirus pandemic has certainly put a dent in its revenue, the streaming services have emerged to save the day. With the second wave of coronavirus crisis creeping its way across the globe, and the U.S. President tested positive for the coronavirus today, the demand for at-home entertainment is now greater than ever.
The rise in demand Disney+, the streaming service, drove a good part of revenue this year. Disney+ may be a relatively new service, but it has already racked up over 60.5 million paying subscribers globally. It took Disney less than one year to achieve something that took Netflix seven years to accomplish.
This is a year where many new streaming providers launched new services. All of this new competition may have some investors wondering if the streaming space is getting a little bit too crowded. And most importantly, whether investors can benefit from such intense competition at all. These companies are looking to win over viewers globally. The winners of this battle will be sure to enjoy the fruits of their labor, rewarding shareholders along the way. With that in mind, are these streaming stocks on your watchlist for the remainder of 2020?
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Top Streaming Stocks To Watch In Q4 2020: Netflix
Shares of Netflix (NFLX Stock Report) surged 5.5% on Thursday. This came after news saying that Netflix got a big boost during the pandemic. There is also speculation that the streaming giant was considering price increases. Apart from gaining subscribers, the company is also looking to increase the number of time users on the platform. Have they done it successfully?
According to a recent report from the branding agency MBLM, Netflix saw a strong increase in usage during the pandemic, second only to video-conferencing software Zoom Video Communications (ZM Stock Report). Separately, Jefferies analyst Alex Giamimo suggested that Netflix may soon increase its subscription prices. That would certainly be a boost to the stock price.
According to his estimates, Netflix could generate as much as $1 billion in additional revenue by increasing its subscription prices by $1 to $2 in one of its major markets. And that is achievable simply because consumers value Netflix so much, and will almost certainly be willing to pay more to access the vast troves of content.
Top Streaming Stocks To Watch In Q4 2020: Roku
Roku’s (ROKU Stock Report) stocks jumped 6.11% during Thursday’s intra-day trading. The uptick in ROKU stock price came after a positive analyst commentary. Jason Bazinet, Analyst from Citi upgraded his 12-month price target for ROKU stock from $180 to $220. Ad-supported video-on-demand (AVOD) services are seeing rising adoption. And that could continue to drive growth in the stock in the coming years.
Recently, Comcast and Roku reached an agreement in which NBCUniversal’s streaming service Peacock will now be available for Roku customers. With the growing streaming video ecosystem, Roku could benefit in multiple ways. And with such concentrated consumer viewing on its platform, it could only be a matter of time before its position gets stronger as competition in the streaming space grows and media companies need to stand out. With the growing amount of streaming content available, Roku allows investors to bet on streaming without picking one streaming provider over another.
Roku is not only resilient during the pandemic, but it is showing itself as a respectable player in the game. Second-quarter revenue grew 42% year over year to $356 million. What’s interesting is that the stock is trading at a decent valuation given to the company’s strong growth prospects. At less than 10 times analysts’ forecast for next year’s revenue, is ROKU stock a steal?
Top Streaming Stocks To Watch In Q4 2020: Spotify
Last on the list, Spotify (SPOT Stock Report) was one of the high flying stocks to own this year. The company was red hot earlier this year when SPOT stock was almost touching $300 per share earlier last month. Since then, SPOT stock has plunged more than 14% as of Thursday’s closing. This could be because SPOT stock was way overvalued. But now that the SPOT stock appears to be more fairly valued. Would you take a bet on this stock?
The music streaming leader is also reportedly expanding distribution of The Michelle Obama Podcast to new platforms following its first season. This podcast has been incredibly popular and is ranked as the No.4 podcast on Spotify among U.S. audiences. By bringing the popular podcast to other platforms, including those with bigger listenership than Spotify, it could boost the appeal of Spotify as a podcast listening platform. That could attract more listeners to Spotify down the line, which could be a long term driver for the company and its stock.
“Millions of listeners across the globe have already embraced The Michelle Obama Podcast and we look forward to growing that audience as we build anticipation for future Higher Ground series,” Spotify Chief Content and Advertising Business Officer Dawn Ostroff said in a press release.