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Streaming has become the norm for many TV viewers, but streaming companies are still duking it out for eyeballs and subscriptions. The lead position in consumer accounts mostly see-saws back and forth between Netflix and Disney, while the smaller players are still figuring out th
Though investors will have to wait until next month to get a full-fledged quarterly update on Netflix (NASDAQ: NFLX), there's a lot of good information to digest in the meantime, thanks to an in-depth interview with the company's Chief Financial Officer Spencer Neumann by Bank of
Fool.com contributor Parkev Tatevosian highlights strategic choices made by Tesla (NASDAQ: TSLA) and Netflix (NASDAQ: NFLX) to an increase in competition and what those decisions could mean for investors.
Shares of media and entertainment giant Disney (
NYSE:DIS
) have continued to be a massive laggard this year, with shares down more than
6% year-to-date and more than 57% off all-time highs. It's been non-stop negative headlines that have fueled the descent in shares, but for the brave and patient dip-buyers willing to be contrarians, I think there's a great deal of value to be had in the name as it hides in plain sight in the Dow Jones Industrial Average Index (
DJIA
).
Like many Wall Street analysts, I'm staying bullish on Disney stock. However, I do acknowledge that the road ahead could continue to be excruciatingly painful.
More Bad News for Disney Stock Has Fueled Negative Momentum
It's hard to believe that Disney hasn't been able to put in a bottom this year as most other Dow Jones firms have. The media world continues to be under considerable pressure, and it doesn't look like streaming will be able to help turn the tide.
Moving from the traditional media model to streaming has entailed considerable expenditures for Disney and its media peers, who may have been forced to show up a bit late to the streaming game. With Hollywood strikes weighing heavily, the entire media industry looks like dead money right now.
Add the
recent feud with Charter Communications (
NASDAQ:CHTR
) into the equation (a dispute between the two caused Disney to temporarily revoke Charter's Spectrum customers from accessing its channels), and it seems like only bad things can happen to Disney.
Though Disney and Charter
recently agreed to terms, putting an end to the recent cable blackout, the whole fiasco seems to have cast a dark shadow over the cable television market, whose days may very well be numbered. Further, it's not hard to imagine that the short-lived cable blackout has upset millions of football fans during the NFL's season debut.
In any case, the wave of bad news should eventually turn in due time. Just like the Disney-Charter feud, the Hollywood strike will come to an end in time, and when good news starts flowing in for a change, it may have a bigger impact on the stock. At the end of the day, Disney stands out as one of the kings of content, and it's strong content that I believe will ultimately prevail when it comes to streaming.
Disney+: The Long Game is the Only One Worth Playing at This Juncture
The streaming market has significantly evolved in recent years. Despite ongoing challenges, Disney appears to be strategizing for the long term with its Disney+ platform, scheduling a steady flow of content releases while subtly shifting its focus towards enhancing its profitability. Indeed, taking the foot off the "growth-at-any-cost" gas pedal may be key to staying afloat through a few more years of elevated interest rates.
While Disney+ may not be poised to significantly challenge Netflix's (
NASDAQ:NFLX
) dominance in the streaming space in the short term, especially in terms of generating lucrative returns from streaming, it appears that the streaming throne remains Netflix's to lose. Recently, Netflix was named as the "most frequently" canceled streaming service, according to a survey conducted by
Vorhaus Advisors.
For now, investors don't seem focused on the long game in the slightest, at least when it comes to the streamers. For instance,
Netflix stock tanked by 5.2% yesterday, as the company's CFO (Chief Financial Officer) remarked on the ongoing Hollywood strikes while noting that its ad-based tier will not drive revenues over the shorter term.
Undoubtedly, the Hollywood strike doesn't seem to be any closer to a resolution. That said, it probably won't last forever, and those investors who throw in the towel over the matter may be the ones that miss out on the longer-term opportunity to be had.
What is the Forecast for DIS Stock?
On TipRanks, DIS stock comes in as a Moderate Buy. Out of 21 analyst ratings, there are 14 Buys, five Holds, and two Sells. The
average Disney stock price target is $110.53, implying an upside of 30.8%. Analyst price targets range from a low of $76.00 per share to a high of $135.00 per share.
The Bottom Line on Disney Stock
There aren't many things to look forward to when it comes to Disney over the near term. Still, it's hard to look past the value to be had in the name if you consider yourself a long-term investor who's willing to brave the carnage.
At writing, Disney stock trades at a 16.2 times forward price-to-earnings multiple, well below the entertainment industry average of 23.5 times. While it's hard to bet on Disney CEO Bob Iger, given his sub-par track record, I think you have to give the man the benefit of the doubt now that expectations have come down following the stock's two-and-a-half-year beatdown.
Disclosure
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