Yahoo Finance Netflix vs. Disney Stock: Which Is The Better Investment?
Netflix (NFLX) and Walt Disney (DIS) have both experienced significant fluctuations in their stock prices recently. This turbulence is largely due to high inflation rates and the challenges of a maturing streaming industry. However, both companies have made notable changes recently, making them potential smart investments. Let’s delve into which might be the better choice.
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Netflix’s Turnaround
Netflix began 2022 on a shaky note, losing subscription video-on-demand (SVOD) subscribers for the first time in more than ten years. The situation worsened in the subsequent quarter, with nearly a million more customers leaving. Despite these challenges, Netflix ended the year with over 230 million paying users, an increase of 11 million from the previous year.
Netflix is attempting to diversify by expanding beyond movie and TV streaming. In late 2021, the company ventured into video games, offering mobile games based on its shows like Stranger Things. Netflix is also moving into cloud gaming, where users can play games on their TVs using their phone as a controller. The company is also expanding to live events, such as the Stranger Things: The First Shadow theatrical show in London, Glass Onion escape rooms, and Bridgerton balls.
Disney’s Streaming Struggles
Despite the success of Disney+, Disney’s streaming business remains unprofitable, losing around $4 billion in 2022. In contrast, the company’s Parks, Experiences, and Products (PEP) unit generated $7.9 billion in operating profit. In 2023, Disney announced plans to cut its workforce by 7,000 and reduce overhead by $5.5 billion, including $3 billion from its content arm.
Disney’s diverse business model, including its parks and character vault, continues to attract consumers. While Disney has been criticized for supporting its streaming service with profits from its parks, experiences, and products, this diversity of profit streams is actually good news for investors.
The Long-Term Bet
When comparing Netflix and Disney as investment options, Disney appears to be the more stable choice for the long term. The company’s diverse revenue streams, including its profitable parks and merchandise segments, provide a cushion against the volatility of the streaming market. Disney’s ability to integrate its content across various platforms and experiences further strengthens its position.
Netflix, while innovative and growing, is more reliant on its subscriber base for revenue. Although its recent ventures into gaming and live events are promising, they are not yet substantial enough to offset potential declines in its core streaming business.
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Ultimately, for investors looking for a more balanced and resilient investment, Disney’s diversified business model and extensive portfolio of beloved characters make it a compelling option. Netflix, with its focus on streaming and emerging ventures, may offer growth potential but comes with higher risks.
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This article originally appeared on GOBankingRates.com: Netflix vs. Disney Stock: Which Is The Better Investment?
