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      Disney (DIS) Or Netflix (NFLX) – Which Stock Has More Potential To Grow

      By Shan Zee

      Published on

      December 14, 2020

      10:25 AM UTC

      Disney (DIS) Or Netflix (NFLX) – Which Stock Has More Potential To Grow

      Before Friday’s opening, Disney’s stock price jumped 7 percent. Investors praised the current medium-term plan of the company, which includes a multi-fold rise in the streaming audience and extensive investment in new content development. By December, Disney+ raised the number of paying subscribers to 87.6 million and has every chance to overcome the bar of 90 million by the end of the year-despite the fact that originally a year ago, those figures were predicted to be seen no earlier than 2024 when the platform was launched. Now in the face of Netflix, Disney+ is just 2 times inferior to its nearest counterpart. It took 13 years, however for the online entertainment leader to attain the current 200 million paying accounts.

      The group expects an audience of 230 to 260 million people for Disney+ by 2024 with the current dynamics, and 350 million with Hulu and India’s Hotstar. In the fast-growing Indian market, a 30 percent to 40 percent increase is expected. At the same time in the near future, the company expects to start raising the subscription price: up to $7.99 per month in the U.S. and 8.99 euros per month in the EU. All these steps together will allow payback to be accomplished in less than 4 years.

      A massive content development program is one of the key things that can ensure such a fast growth of the audience eager to renew a subscription. Disney would increase its animation and filming budget to $14-16 billion a year. Annually, the viewer will receive around 100 new episodes and films. It has already been put into development, including 15 full-length animated and feature films, as well as many serials on the worlds of Marvel and Star Wars. The latter is particularly important: Disney was spurred to write two more spin-offs of this Saga by the resounding success of the space western Mandalorian.

      In the extended session immediately after the announcement of the new plan, DIS shares grew. The rise was already more than 7 percent, initially adding around 4 percent before the start of the main session on Friday and concluded the day rising over 13%. Netflix shares rose at the same time but within 1 percent. Disney is now trading at over $175 per share, which is 11% higher than its equilibrium price. By comparison, Netflix is seriously running behind its fair value. We predict that they will grow by 9 percent to $545 per share in the coming months.

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