Steaming Services Grow on Coronavirus Crisis: 3 Stocks to Watch

Ritujay Ghosh
·4-min read

The coronavirus pandemic has left people with fewer entertainment choices. With strict restriction on public gatherings and entertainment hubs like parks, gaming zones and theatres closed, there isn’t much to do except for relying on video and music streaming services.

In a way the pandemic has been working miracles for the streaming industry. Users have been increasing and companies have been garnering more revenues in the form of increased subscriptions. It can thus be said that the video and music streaming industry has been one of the biggest beneficiaries of the COVID-19 pandemic.

Disney Gains From the Coronavirus Crisis

While most industries have been battered by the coronavirus pandemic, streaming companies have been gaining with more people subscribing to their services. On Aug 4, The Walt Disney Company DIS reported its third-quarter 2020 earnings wherein it said that it now has 100 million paid subscribers across its streaming services, which include Disney+, Hulu and ESPN+.

The company also revealed that the streaming service has amassed 60.5 million paid subscribers worldwide. This is up from 54.5 million that was reported back in May, which represents impressive growth. It also means that Disney has hit its five-year subscriber goal in nine months, blowing by industry estimates and expectations. Understandably, the growth was driven by the pandemic-led lockdown that helped the company add more subscribers.

Not only that, but the company also has plans to launch yet another streaming service internationally in 2021 under the Star brand it acquired from Fox. The service will feature content Disney already owns from ABC Studios, Fox Television, FX, Freeform, 20th Century Studios and Searchlight.

Streaming Services Poised to Grow

The story is more or less the same for Disney’s rivals too. Last month, Netflix, Inc. NFLX released second-quarter subscriber figures, which exceeded its own projections. The streaming giant gained 10.1 million paying customers in the second quarter, beating its own estimates of 7.5 million. It has added a total of 26 million new subscribers in 2020. In contrast, it saw 28 million new subscribers for the whole of 2019.

Also, Comcast Corporation’s CMCSA NBCUniversal launched its Peacock services last month, which gives the company the perfect opportunity to cash in on the coronavirus crisis by adding more subscribers. According to a recent report by Grand View Research, the global video streaming market size was valued at $42.6 billion in 2019 and is projected to witness a CAGR of 20.4% between 2020 and 2027.

Stocks in Focus

Streaming services are one of the rare few that is benefiting from the coronavirus pandemic, which has kept billions of people at home with nothing to do but stream. This thus makes an opportune time to invest in video and music streaming stocks.

Netflix, Inc. is considered a pioneer in the streaming space. It has been spending aggressively on building its original show portfolio. The company added more than 10 million paid subscribers in the second quarter.

The company’s expected earnings growth rate for the current year is 52.1%. Its shares have gained 18.2% over the past three months.  The company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

Amazon.com, Inc. AMZN besides being an e-commerce giant, offers several other services. Amazon Prime, a membership program, provides access to streaming of movies and TV episodes among other services, and is one of the market leaders in the streaming space. 

The company’s expected earnings growth rate for the current year is 36.9%. The Zacks Consensus Estimate for current-year earnings has improved 54.2% over the past 60 days.  Amazon carries a Zacks Rank #3.

Comcast Corporation’s Peacock video streaming service has already gained more than 10 million paid subscribers in less than a month after its launch. Peacock has three tiers of service: Free, Premium, and Premium Plus. Peacock also offers a lineup of around 25 curated digital linear channels, featuring long-form and digital-originated programming content from NBCUniversal's broadcast and cable properties as well as third-party content providers.

The company’s expected earnings growth rate for next year is 23.9%. The Zacks Consensus Estimate for current-year earnings has improved 1.7% over the past 60 days. It carries a Zacks Rank #3.

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Comcast Corporation (CMCSA) : Free Stock Analysis Report
 
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
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