When talking about video streaming stocks, the first one that comes to mind is Netflix. Yes, you read that right — Netflix is the biggest streaming stock in the world. What began as a means to avoid excessively high cable TV costs and lack of choice options in programs ended up a necessity in a new world where staying home is the new black. The global video streaming market size was valued at $60 billion in 2021 and is expected to grow at a compound annual growth rate of (CAGR) of 21.3% from 2022 to 2030. Now, other big names have entered the market, including Apple and Amazon. In this article, we will discuss each firm and analyze their streaming market share.
- Netflix stocks
- Apple’s streaming service and stocks
- Amazon’s streaming service and stocks
- The best stock to buy in the streaming industry
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Explanations and definitions of terms.
Netflix is a company based on its Netflix app and Netflix web app, where users subscribe to the service to watch streamed content. Netflix holds 21% of the market share of streaming services. Founded way back in 1997, Netflix now has a market capitalization of $250 billion.
One of the streaming giant’s greatest achievements is its subscriber count increasing five-fold in less than a decade, from 41 million in 2013 to 203 million in 2020. How did that happen? One of the major factors for this was how the service set itself apart from other streaming services: Netflix wasn’t just distributing media with high production quality and starring A-list celebrities — it was creating it. It was also the first major streaming service to offer a flat fee for an abundance of different, on-demand shows, films and documentaries that meant viewers never had to let a channel’s programming schedule decide what they watch and when they watch it. The element of choice that Netflix granted to viewers not only fueled the growing trend, but garnered fierce loyalty in its subscribers.
Let’s now take a look at Netflix’s stock price. As can be seen in the graph below, 2020 was Netflix’s golden age, when we were all at home watching Tiger King and The Queen’s Gambit under lockdown. Naturally, Netflix’s revenue and profitability sky-rocketed during this time along with its stock price. However, in April 2022, the Netflix stock crashed 40% over two days, and a further 75% over the next month following a less-than-stellar financial report that showed the streaming giant had lost 200,000 subscribers since the start of the year. Now trading at around $230 (a far cry from its all-time high of $700 per share), the severe correction in Netflix’s stock price can be considered a buying opportunity when looking at the company’s strong fundamentals 🔽
Apple’s streaming service and stocks
Apple is the world’s biggest company by market capitalization. Included in the Dow Jones Industrial Average and well-known for its innovations in mobile phones, tablets and laptops, Apple is recognized as the benchmark for modern technological firms.
Seeing Netflix’s success as well as the growing trends of binge-watching, an abundance of choice and “Netflix and chill,” Apple wanted some of that streaming pie. In 2019, the firm launched its own on-demand streaming service, Apple TV+, with exclusive shows and documentaries. Despite a slow start, Apple now holds 6% of the market share of streaming services, and further promotes its service by offering a free yearly subscription for those who have purchased Apple devices. Let’s try to understand the Apple chart and its investment opportunity.
Apple’s innovations, reputation and general stability makes it a very good-quality stock for long-term investment. The tech giant is always striving to innovate and consistently upholds its own design principles, which gives it a competitive edge over its competitors. Now that the firm has entered the streaming market with Apple TV+, it has a competitive advantage in selling its subscription service to users of its devices. Right now, the price of an Apple share is about $170. Traders can wait for a small correction in the short term and start accumulating the stock at every dip.
Amazon’s streaming service and stocks
Amazon is another big company in the streaming sector that can be considered both a safe investment and good for regular trading. As one of the Big Four tech companies in the world along with Apple, Alphabet (Google) and Meta (Facebook), Amazon made a name for itself as an e-commerce site and has gradually expanded not only its operations but range of services across the globe. Now offering native tech, a massive ebook library and even a grocery-delivery service, Amazon seems to have made it a mission to penetrate every market that has some space to spare.
Amazon Prime Video decided to follow in Netflix’s footsteps, supplementing its exclusive offerings with in-house media productions via the tech giant’s film-producing subsidiary, Amazon Studios. Amazon Prime Video is also gaining popularity in the Asian market, including India — a very positive factor for Amazon stock. A formidable contender for Netflix, Amazon holds an ample 20% share of today’s streaming service market. Since Amazon has seen consistent profit for the past 20 years, its stock price has performed very well over the same period of time. Thus, Amazon can be considered a good investment as well as a good stock for trading. Due to Amazon’s market capitalization being more than $1 trillion, manipulating its stock price is incredibly difficult.
The best stock to buy in the streaming industry
While Netflix is purely in the video streaming sector, Apple and Amazon are predominantly in the tech and retail sectors. If it’s streaming alone that you want to invest in, then there is no alternative to Netflix. With a price-to-earnings (P/E) ratio of around 20 as opposed to the industry standard of 50, Netflix stock is well-priced according to its earnings. Considering Netflix’s other fundamentals, its stock is a good buy at current market price for the long term.
If you are looking for a more diversified stock in the video streaming sector, then there are no better options than Apple and Amazon. Their stocks are further supported by their involvement in other sectors as well as a strong presence in the streaming industry, which grants them a stable price and robust upward growth. While the tech sector’s P/E is 20, Apple’s P/E is 26. Meanwhile, Amazon’s P/E is 113, compared to the retail sector’s P/E of around 47. So, if we compare based on P/E ratios, Apple is a more valuable investment than Amazon.
Overall, you can invest depending upon the level of risk you are willing to take on and your investing style. Each of these stocks are suitable, depending on what you want from them. Whichever you choose should suit your trading style as well as your personal financial goals.
Taking the above points into consideration, these streaming giants’ stocks can be ranked in the following way:
The streaming sector is very competitive and high-growth, and the world’s biggest companies are trying to get a slice of the pie. With Apple, Amazon, Netflix and now Disney as the main competitors in this sector, there is a fine selection of high-quality stocks that can be considered robust long-term investments. These stocks can also be used for trading, as their gargantuan market capitalization makes manipulating them near impossible. Give it a try, but not before mastering the basics!Trade Stocks Now
Risk warning: The contents of this article do not constitute investment advice, and you bear sole responsibility for your trading activity and/or trading results.
Factors such as cash flow, debt-to-equity ratio, business model and competitive advantage, among others.
A stock market index containing 30 prominent companies being traded on stock exchanges across the United States.
Gives an indication as to whether a company’s stock is overvalued or undervalued on the market.