Inside money, markets, and big tech

Disney wants Netflix’s throne, and the Wall Street crowd is into it

Disney is really into streaming now

Markets reacted positively to Disney’s newly-found laser focus on streaming, pushing the company’s stock price up nearly 5%.

Disney announced a restructure of its media and entertainment arms in a Monday press release. The move centralizes those businesses into one entity that will oversee all distribution and monetization of Disney content, including its streaming platform Disney+. This will mean a significant boost in funding for original content.

Disney’s pivot comes at the tail end of a tough year for the entertainment giant. Rolling COVID lockdowns in March obliterated its Parks, Experiences, and Products department, forcing the company to report a profit loss of 91% in 2020’s first quarter, and a $4.72 billion net loss the following quarter.

By August, park closures and canceled cruises meant a $3.5 billion hit for Disney’s parks and experiences wing.

Despite boasting more than 100 million Disney+ subscribers and a 2% increase in revenue, the company’s international and direct-to-consumer businesses (which handles Disney+ and Hulu) still bled $706 million last quarter, significantly more than the $562 million lost in 2019’s equivalent.

Disney stock struggled before COVID

Disney stock has underperformed severely this year, down 10% while the tech-heavy NASDAQ 100 is up more than 37%. Even the broader S&P 500 index, which includes struggling airlines and banks, has risen 9% this year.

In fact, Disney has spent practically the entire year in the red, having traded evenly for the first few days but sinking ever since. Disney’s market value is currently $225 billon, having shrunk $38 billion this year.

disney, stock
This shows how much market value each company added or lost since the start of the year. Chart made with Flourish.

On the other hand, Disney’s new arch nemesis Netflix has seen its share price explode from $326 to $540, representing 65% growth. This has sent Netflix‘s market value beyond $238 billion  more than $84 billion added since the start of 2020.

[Read: ‘Mysterious’ billionaire cashes in $127M worth of Gates-backed pharma stock]

Interestingly, just as Disney formally redirects all of its might to growing its streaming business, the markets value Netflix and Disney pretty well equally, just $38 billion separating the two content powerhouses.

For what it’s worth, a raft of Wall Street analysts are sold on the idea, with finance portal The Street reporting bullish sentiment among analysts from the likes of JP Morgan and Rosenblatt Securities.

Published October 13, 2020 — 14:41 UTC