Netflix Inc. (NASDAQ: NFLX), with its more than 280,000,000 subscribers, maintains an important first-mover edge in streaming.
The company’s aggressive investment in original content and its diverse strategy of content spanning languages and genres continues to propel international expansion.
Steve Weiss, of Short Hills Capital Partners, believes that there is enough space in streaming to allow Walt Disney Co. (NYSE:DIS) and NFLX to grow together in 2025.
The streaming market is expected to continue growing at an accelerated pace
Global streaming is also expected to grow at a rapid rate.
By 2032, the streaming market will grow by a rate annualized of 18%.
The current penetration rate also indicates that there is room to grow.
There were 1.8 billion streaming subscriptions at the time of writing, compared to an estimated 5.5 billion broadband users.
Disney can also benefit from the increased willingness of consumers to sign up for multiple streaming services in more developed countries.
Disney’s streaming service has made a profit, which further supports the narrative of “sufficient space”.
This segment’s operating profit was $321 millions in Q4 compared to an expected loss of $387 Million.
Disney is now 35% higher than its August low for the year.
Disney Stock could reach $140 by 2025
Disney’s streaming service could also grow along with Netflix because of its slightly different content strategy.
Disney focuses more on its family-friendly entertainment, as well as on franchises such Marvel, Star Wars and Pixar. Netflix is focused on original programming and licensing.
In order to achieve profitable growth, Disney will continue to rely on this key difference to appeal to a slightly diverse audience from Netflix.
The company has also bundled Hulu with ESPN+ to provide consumers an additional value proposition. This strategy helped the company gain more than 150 millions global subscribers in the last four years.
Analysts at Bank of America Securities believe that the numbers will only continue to rise in years to come.
Last week, the investment firm reiterated that it was a “buy” on Disney’s stock and increased its target price to $140. This indicates a potential 13% increase from this point.
BofA’s recent note cited guidance as the reason for their bullish outlook.
Disney’s per-share earnings are expected to increase by just over 10% in the fiscal year FY25. The management believes it can push this growth rate into the double-digits in the following two years.
Disney’s shares pay out a current dividend yield of 0.64 percent, making them a very attractive option for anyone looking to generate passive income.
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