With the entertainment behemoth Walt Disney Co. (NYSE: DIS) facing continuous challenges over 2023, including job cuts and the decline in the number of its subscribers that exerted downward pressure on its stock, another streaming giant could take its place as the global leader.
As it happens, Disney stock has declined over 11% in the past year and as much as 43.3% over the past three years from the $168.17 where its price stood on January 29, 2021, according to the most recent stock price figures retrieved by Finbold on January 29, 2024.
And while it has demonstrated some signs of recovery in the past few months, its direct-to-consumer (DTC) segment, which hosts the Disney+ streaming service, has been unprofitable, reporting an operating loss of $420 million in the last fiscal quarter that ended on September 30, 2023.
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On the other hand, the company expects to see profitability in the fourth quarter of the fiscal year 2024, likely due to cost cuts from reducing annualized expenses by $7.5 billion altogether, according to renowned entrepreneur and New York Times bestselling author Neil Patel.
As he explained:
“You’d rather see profitability achieved via strong customer gains that scale up the segment. By focusing on cutting costs, the business might be neglecting investments in growth opportunities, a move that could position it poorly to capture the secular streaming trend.”
Netflix to the top?
At the same time, Disney’s competitor Netflix (NASDAQ: NFLX) has been recording gains on all of its charts, advancing 61.54% across the past 12 months and making a slightly more modest increase of 7.14% across the previous three years due to its bullish streak encountering a major obstacle in 2022 that sent it to $180.97 on May 6 that year.
Since then, the Netflix stock has been in a consistent upward trend, surpassing analysts’ Q4 expectations as it added 13.1 million net new subscribers in the final three months of 2023, recording a 13% increase year-over-year (YoY), growing at a much faster rate compared to Disney+, with its 260 million-strong subscriber army well outperforming the former.
On top of that, as Patel noted, Netflix’s unit economics are superior to Disney’s, recording a $16.64 average revenue per user in the United States and Canada during the fourth quarter, which is 122% higher than the $7.5 for Disney+ Core for the same region.
Finally, the entrepreneur argued that it was “even more encouraging to see the profits” after the company reported an operating margin of 16.9% in the last quarter and has shared the expectation that it would arrive at 24% for the full year, which is far from what Disney’s DTC division can hope for.
Netflix stock price analysis
Meanwhile, the Netflix stock is at press time changing hands at the price of $570.42, up 1.5% on the day, adding up to the increase of 18.11% across the previous week, the 15.99% gain over the past month and 58.11% over the last year.
All things considered, Netflix’s position is currently better than Disney’s, with consistent growth in both the short and longer-term time frames and positive expectations, as it outperforms a whopping 93% of all assets in the stock market in regards to the yearly performance.
Moreover, its performance is better than 94% of all other stocks in the entertainment industry and is currently making a new 52-week high, in line with the S&P500, which is also trading near new highs, in addition to the strong liquidity with an average volume of nearly 5 million traded shares per day.
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