The era of shared accounts and marketing passwords gives its last blows. On-demand audiovisual content platforms, or streamingthey readjusted the market with new restrictions on subscriptions and new prices to increase their revenue. And, at this point, it was Netflix, the stock that benefited the most from this change on the floor. The example is that the the company with the red “N” increases by 50% in 2024. Netflix will continue to record the highest gross revenue per subscriber through 2025, but it will be Walt Disney, with its Disney+ platform, that will see the biggest increase in this figure through the end of next year. These would be the best companies to subscribe to on the stock market, according to experts, although there are other options that have potential in the sector.
Analyst firms are adjusting their assessments of the on-demand content sector ahead of the presentation of third quarter 2024 results. All expectations in companies like Paramount, Netflix or Warner Bros Discovery They revolve around the number of users who manage their accounts and the income they report. Likewise, experts are also examining how the advertising revenue that these platforms now include in the middle of a film or before a series behaves in certain accounts.
However, the market also looks for the same in listed companies that are not primarily exposed to the online content sector but account for a significant portion of their revenues. This is the case of Apple (Apple TV), Amazon (with Amazon Prime Video) or Walt Disney (Disney+) where he streaming This represents less than 25% of your income totals, based on 2023 accounts.
At this point, Netflix remains the market favoritealthough it trades with virtually no upside potential. Since late 2022, Netflix’s stock price has been chasing the market consensus target price, which currently stands at $720.6, according to FactSet. But Walt Disney also has a buy tip and a lead on the stock of 18.5% to the price target of $110.85.
It is the latter company that will increase its average revenue per subscriber (ARPU) the most in 2024 and 2025, according to the market consensus collected by FactSet. Disney will close the current year with an average ARPU of $5.6. That’s half of what Netflix will bring in and would be a far cry from Warner Bros.’ $8. (HBO Max). Roku is around $40 by that measure, although it doesn’t distinguish between the average revenue from its streaming business and the segment of set-top devices used to distribute third-party channels or libraries, such as Netflix. However, the expected growth at Walt Disney will involve an increase of more than 30% compared to what was observed last year and will increase another 12% by 2025, according to the same forecasts.
Walt Disney’s business is making more and more money from its online content platform (it has never exceeded $5 in ARPU). Based on the projections made Bloomberg, Disney+ will once again exceed 230 million subscribers at the end of 2024, a figure lost in 2022, and which will bring in more than 425 million dollars. “We view Disney as one of the highest quality companies in the content and media industry because of its unique library and franchises that have transformed it into a streaming. “We are optimistic about the long-term profitability of its platform,” said Steven Cahall, an analyst at Wells Fargo.
Citi’s analytics team believes Netflix will benefit from its continued rollout of advertising across its platform as it cracks down on account sharing. “However, at current levels we see that the risk-reward ratio is relatively balanced” commented Jason B. Bazinet, of Citi. Furthermore, in the streaming competition between different platforms, Netflix is fully exposed to this segment while other companies like Walt Disney (with its theme parks or cruises) or Amazon (with e-commerce as a flagship product above Prime Video) have other ways to increase their profits.
At this point it will be Amazon, the company that will increase its profits the most gross operating income next year, according to the market consensus collected by FactSet, with 16% more than what is expected for this year ($137.45 billion). For its part, Apple will increase its EBITDA by 8% in 2025 to reach $145 billion in gross operating profit.
Among the companies with a buy recommendation by the market consensus, Apple, Amazon and Netflix trade with a PER (times net profit included in earnings per share) greater than 34 times (more than 38 in the case from Netflix or Amazon). ). In other words, it would take 34 years of consistent consecutive profits to cover an initial investment. So, heWalt Disney would be cheaper, with a PER of 18.5 timesalthough it is true that the company is not listed as a technology company as such due to the particularity of its activity. Warner Bros will only emerge from losses in 2026, according to FactSet, so it cannot be compared by this multiple, in addition to having a recommendation to maintain, while experts advise closing positions in the case of Paramount, which lost 28% during this period. it goes from 2024.
