Netflix Stock: Could It Thrive Against Disney Streaming?

Posted On August 31, 2017 3:15 pm

a purple and white Walt Disney Company Logo

Netflix stock is up over 41% so far this year. The stock recently came under pressure after Disney announced to sever its ties with Netflix. But, analysts think thatNetflix, Inc’s (NASDAQ:NFLX) core business won’t be affected. Piper Jaffray recently surveyed over 500 US-based Netflix subscribers, and concluded that less than 10% people watch Disney content on Netflix. Subscribers who are fond of Disney will stick to Netflix and get a Disney subscription in the future.

Disney will launch its streaming service in 2019. The service will be available only in the US. The Disney streaming service will be focused on sports and kids/teens content. Analysts think that it will take several years for Disney to come anywhere near to the level of growth and subscribers that Netflix enjoys.

Internationally, Disney can never beat Netflix. Analysts also think that Disney’s target audience is kids and teens, who cannot buy subscriptions on their own. On the other hand, Netflix offers diverse content worldwide which attracts audiences from every demographic and age group.

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Bernstein analyst Todd Juenger recently said in a report that investors should not be worried about Netflix, Inc. (NASDAQ:NFLX) losing its partnership with Disney. The analyst said that Netflix has massive growth opportunities on its own. Juenger estimates that Netflix will get an additional 168 million international subscribers, and 30 million US subscribers, by the end of 2030.

The report also said that Netflix will maintain its partnership with Disney in Australia and Netherlands. Netflix management is also in talks with Disney for getting the rights of Marvel and Lucasfilm movies after 2019. The company is already partnering with famous creators like Carol Burnett, David Letterman, Shonda Rhimes, Jerry Seinfeld, and Chuck Lorre.

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Netflix will lose a lot of excellent and successful content after the end of its partnership with Disney. Disney was providing Netflix with blockbuster titles like Star Wars and Pirates of the Caribbean. But Netflix wasn’t putting all its eggs in one basket. Netflix original content like House of Cards, Beasts of No Nation, and Narcos have broken all records of popularity.

Fears regarding Netflix’s debt are also overblown, as the company has about $20 billion in long-term debt and obligations. However, Netflix is operating in an industry where debt and obligations are a norm. Disney/ESPN has nearly $50 billion in obligations. In terms of its Netflix stock, the company is investing heavily in productions. These efforts will likely pay off in the future.

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