Investing in Streaming Stocks in 2023

Roberto Rivero

The way people consume television is changing. More and more people are spending more and more time streaming their favourite shows instead of using traditional viewing services.

Streaming certainly seems to be the future of television but with so many companies entering the space, who is best poised to succeed? Who will win the streaming wars? In this article, we will examine 3 streaming stocks for investors to consider in 2023.

Streaming Stocks to Watch in 2023

Streaming has been on the rise around the world for a number of years. However, it was the outbreak of the Covid-19 pandemic in 2020 which really drove growth in this sector.

With many confined to their homes, people had lots of time on their hands to watch television, with streaming services particularly benefitting from this change in behaviour.

During 2020, global subscriptions to streaming services surpassed 1 billion, a rise of 26% year on year. Now the world has reopened post-Covid, people are less reliant on streaming services for entertainment, but that doesn’t mean that further growth doesn’t lie ahead.

In the US, streaming services have overtaken cable and broadcast to claim the largest share of total television viewing, reaching this milestone for the first time ever in July 2022. So, how can investors take advantage of this trend? Which streaming stocks should you consider adding to your portfolio in 2023? In the following sections we highlight 3 streaming stocks to watch.

Streaming Stocks to Watch:
Netflix
Disney
ITV

Netflix

When it comes to streaming stocks, Netflix is likely the first to come to mind. After all, it was Netflix that really got the ball rolling on streaming as we know it today, and still commands one of the largest subscriber bases in the industry.

The streaming giant had a challenging first half of 2022, with total subscribers falling for the first time in ten years in the first quarter, before falling again in the second. Fortunately, it snapped this unwelcome streak in the third quarter, adding more than 2.4 million subscribers which improved sentiment amongst investors.

Depicted: Admirals MetaTrader 5Netflix Weekly Chart. Date Range: 19 June 2016 – 11 January 2023. Date Captured: 12 January 2023. Past performance is not a reliable indicator of future results.

Netflix’s disappointing subscriber losses in the first half of 2022 were echoed in its share price, which plummeted more than 70% in the first six months of the year. Share price consequently recovered somewhat, rising 69% in the second half of the year, but still closed 2022 down more than 50% for the year.

Thanks to its longevity in the industry, Netflix has one of the only streaming operations which is actually generating consistent profit. In full year 2021, operating income was $6.2 billion, an increase of 35% year on year. However, operating income fell almost 10% to $5 billion in the first nine months of 2022, reflecting Netflix’s subscriber struggles.

In an attempt to diversify their revenue streams, Netflix recently partnered with Microsoft in order to unveil a new, cheaper, ad-supported subscription tier for consumers. As well as potentially boosting revenue from advertising, this cheaper alternative may increase Netflix’s appeal to more budget-conscious consumers.

For those interested in gaining exposure to the streaming industry, Netflix is one of the few pure-play streaming stocks available, and the fact that it is generating profit is a big positive. However, as 2022 demonstrated, increased competition and the rising cost of living could cause difficulty in the future.

Disney

The Walt Disney Company launched their much anticipated streaming service, Disney+, late in 2019, which they could not have timed more perfectly.

With the subsequent outbreak of coronavirus and the stay-at-home orders which followed, streaming subscriptions for Disney+ boomed.

At its inception, Disney+ set itself a target of 60 – 90 million subscribers by the year 2024. By November 2020, subscribers had surpassed 73 million and in October 2022 total subscribers stood at 164 million.

Including Disney’s other streaming offerings, Hulu and ESPN+, the company surpassed Netflix last year in terms of total subscribers, with a grand total of 236 million in October 2022.

Depicted: Admirals MetaTrader 5 – Disney Weekly Chart. Date Range: 26 June 2016 – 11 January 2023. Date Captured: 12 January 2023. Past performance is not a reliable indicator of future results.

Like Netflix, Disney’s share price had a year to forget in 2022, plummeting by 44% by the close of the year.

The rising cost of living means consumers are revaluating their spending, and investors are concerned that many discretionary items such as streaming subscriptions are in danger of being trimmed from budgets.

Furthermore, in the uncertain economic climate investors have shunned stocks which lack robust fundamentals, and deep losses emanating from Disney’s Direct-to-Consumer (DTC) segment, which houses Disney+, may have played a role in the stock’s struggles last year.

In the year ending 1 October 2022, Disney’s DTC division made an operating loss of $4 billion, deepening losses of $1.6 billion from the previous year. Nevertheless, these considerable costs have led to Disney stealing significant market share from Netflix.

Moreover, these losses were more than offset by operating income from Disney’s other divisions, particularly Parks, Experiences and Products, whose operating income soared year on year thanks to the removal of Covid-19 restrictions.

Herein lies a benefit of investing in Disney, although one which may not appeal to everybody, the company is more than a streaming stock, it is a well-diversified global entertainment giant.

ITV

ITV is a free-to-air public broadcast television network in the UK, which was launched back in 1955. So, what’s it doing on our list?

ITV had a not-so-popular video-on-demand service called ITV Hub for over a decade. However, on 8 December 2022, the company replaced ITV Hub in favour of a new streaming service named ITVX, which promised to feature substantially more programming than its predecessor.

At the time of writing, a month into existence, ITV have reported that their new streaming service has so far attracted strong demand, with streaming hours for the month increasing 55% year on year.

Although both Netflix and Disney have plans to introduce cheaper ad-supported subscription tiers to their streaming services, neither has yet done so in the UK. ITVX, on the other hand, is one of the few free streaming services available to UK customers.

ITVX’s basic, ad-supported, subscription tier is completely free, something which will potentially attract Brits looking to cut costs due to the high cost-of-living in 2023.

Depicted: Admirals MetaTrader 5 – ITV Weekly Chart. Date Range: 26 June 2016 – 11 January 2023. Date Captured: 12 January 2023. Past performance is not a reliable indicator of future results.

After hitting an annual low of around 55p in September 2022, ITV shares had a resurgence for the remainder of the year, rising by 36%. However, it closed 2022 with a total loss of 32% for the year and, as evidenced in the chart above, is following a long-term downward trend.

Despite share price weakness, ITV’s fundamentals remain fairly robust. In the first half of 2022, total revenue grew 9% to £2 billion, whilst statutory operating profit rose 46% to £228 million.

Whilst Netflix doesn’t pay a dividend, and Disney is yet to resume theirs since the outbreak of the coronavirus pandemic in 2020, ITV currently pays an attractive dividend, which yields 6.4% at the time of writing.

Nevertheless, given that the company’s new streaming service is still very young, it may be prudent for investors looking to gain exposure to streaming stocks to wait and see how the service performs in the coming months.

Investing with Admirals

With an Invest.MT5 account, you can buy shares in all 3 of the streaming stocks examined in this article, as well as over 4,500 other companies and more than 200 Exchange-Traded Funds (ETFs)!

Other benefits of the Invest.MT5 account include:

  • Competitive commissions and no-account maintenance fee
  • The ability to buy fractional shares in 700 of the world’s most exciting companies
  • A constantly growing library of educational articles and tutorials and regular market analysis
  • Exclusive access to our Premium Analytics portal, where you can find the latest market news, sentiment and technical insight

In order to start enjoying these benefits and many more, click the banner below to open an account today:

Invest in the world’s top instruments

Thousands of stocks and ETFs at your fingertips

INFORMATION ABOUT ANALYTICAL MATERIALS:  

The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admirals investment firms operating under the Admirals trademark (hereinafter “Admirals”) Before making any investment decisions please pay close attention to the following:  

  • This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
  • Any investment decision is made by each client alone whereas Admirals shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
  • With view to protecting the interests of our clients and the objectivity of the Analysis, Admirals has established relevant internal procedures for prevention and management of conflicts of interest.
  • The Analysis is prepared by an independent analyst Roberto Rivero, Freelance Contributor (hereinafter "Author") based on personal estimations.
  • Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admirals does not guarantee the accuracy or completeness of any information contained within the Analysis.
  • Any kind of past or modelled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admirals for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
  • Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.
TOP ARTICLES
Best UK Shares to Watch in 2023
While most stock markets ended 2022 in the negative, the FTSE 100 stock market index - which measures the value of the largest 100 companies listed on the London Stock Exchange - bucked the trend and ended higher.  This makes it a good time to investigate what could be the best UK stocks for this ye...
4 High Yield Dividend Stocks to Consider
Dividend stocks are stocks which distribute a portion of the company’s earnings to shareholders, usually in the form of cash. These type of stocks are sometimes overlooked by less experienced investors, but holding shares which pay regular dividends in your portfolio can be very rewarding as a sourc...
Investing to Beat Inflation in 2023
As inflation reaches levels not seen since the 1970s, the purchasing power of our money is slowly declining with each passing day. The only way to eliminate this effect is to invest your money somewhere which has a return greater than or equal to the current rate of inflation, but this is much easie...
View All