In this article, we will take a look at the 7 best streaming and TV stocks to invest in.
Consumer Behaviour Around Streaming Choices
Almost all streaming services hiked up their rates and drove subscription prices high in 2023. However, cost is not the biggest factor for consumers while they stream. As of today, the price of streaming services doesn’t affect loyalty to an entertainment provider as it did in the past. Amdocs’ “The New Streamer 2024” report revealed that consumers are expecting improved experiences with rising costs. According to consumers, original content is the top feature that makes a subscription worthy. Other leading factors include access to older titles, new content every few weeks, and being able to watch anywhere.
Trends Shaping the Streaming Industry
Forbes reported that streamers have been victims of long-term challenges related to profitability and subscriber growth. To counter these issues while catering to evolving consumer demands, streamers are opting for ad-supported plans. With almost half of the younger generation open to seeing more ads, this is a potential way to boost revenue.
Streamers are also trying to score exclusive agreements and partnerships with sports leagues as live sports has become a hot commodity in streaming. Simultaneously, the cost of original content comes at reduced profitability. Against this, the potential solution is a consolidation of streaming platforms to allow access to deeper libraries of content for consumers without compromising on their priority of having original content on their plate. Additionally, cloud gaming is being integrated into streaming services considering 70% of Gen Z appears to be interested in it.
On October 18, Ben Silverman, Propagate Content Chairman & Co-CEO, appeared on CNBC giving examples of the aforementioned streaming industry trends. Commenting on the robust Q3 earnings for streaming giant Netflix, he said that its success would lead to more consolidation among the traditional media players in the smaller streamer space. The company is increasingly investing in original content, sports content, and gaming, something that will continue to reward the company as it expands its profits as well as businesses. While it has the money from its streaming business to make those investments back into streaming, many players in the streaming space do not have the same capabilities. Comcast also has the ability to sell a lot of WiFi and has many other businesses that can drive investment in the content business. He mentioned the telecommunications and media firm’s acquisition of NBCUniversal becoming an engine for the whole company. In the views of Silverman, more troubled are the companies that are pure-play so they need to either consolidate to get to scale or be acquired by the bigger players in the future.
Additionally, Silverman emphasized how sports acquisitions are the key drivers to advertising and not just the drivers in the ability to scale an audience at once. For instance, The streaming giant will be live-streaming two of the 2024 season’s NFL games on Christmas Day. Previously in July, NBCUniversal and the NBA announced an 11-year agreement for NBC, Peacock, USA Network, Sky Sports, and Telemundo to present NBA and WNBA regular-season and playoff games starting in the 2025-26 season.
With that being said, let’s move to the 7 best streaming and TV stocks to invest in.
Our Methodology:
In order to compile a list of the 7 best streaming and TV stocks to invest in, we sifted through ETFs, the Yahoo Finance stock screener, the Finviz stock screener, and online rankings to create an initial list of stocks. Moving on, we shortlisted the top 7 stocks from our list which had the highest number of hedge fund holders. The 7 best streaming and TV stocks to invest in have been arranged in ascending order of their hedge fund holders, as of Q2 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
7 Best Streaming and TV Stocks To Invest In
7. Roku, Inc. (NASDAQ:ROKU)
Number of Hedge Fun Holders: 35
Roku, Inc. (NASDAQ:ROKU) was founded by Anthony Wood and pioneered streaming to the TV. The firm has a mission of becoming the streaming platform that connects and benefits the entire TV ecosystem around the globe. Roku streaming devices are used by many in North America, Latin America, and parts of Europe. While the company connects users to the streaming content they like, it allows content publishers to build large audiences and provides advertisers with tools to engage consumers.
Roku has a market-leading scale. The Roku operating system serves as the top-selling TV OS in the US with TV unit sales larger than the next two TV operating systems combined. Additionally, Roku maintains a robust viewer engagement with 30.1 billion hours streamed by users globally in Q2. Streaming time on Roku in the US is thrice than the next streaming CTV brand according to Comscore CTV Intelligence data for May ’24. Additionally, US households representing over 120 million people start their streaming journey every day on the Roku Home Screen.
Roku, Inc. (NASDAQ:ROKU) closed a good second quarter. Q2 marked the firm’s fourth consecutive quarter of positive adjusted EBITDA and free cash flow (TTM). Total net revenue was $968 million, up 14% year-over-year. The firm grew streaming households 14% year-over-year and streaming hours 20% year-over-year.
Roku, Inc. (NASDAQ:ROKU) is leveraging its position as the lead-in to TV to benefit from the ongoing shift to streaming and is successfully depicting growth in its unmatched scale and engagement.
6. Paramount Global (NASDAQ:PARA)
Number of Hedge Fun Holders: 39
Paramount Global (NASDAQ:PARA) is a media and entertainment company with expertise in streaming, advertising, consumer products, and global markets. The firm delivers premium content and experiences for audiences across platforms globally. Other than offering streaming services and digital video products, the company provides powerful capabilities in global production, content distribution, and advertising solutions.
Paramount boasts a powerful and unique portfolio of network, studio, and streaming brands including CBS, Paramount Pictures, Nickelodeon, MTV, Comedy Central, BET, Paramount+, and Pluto TV. The firm has a global reach of over 4.3 billion subscribers across more than 180 countries. It also has the privilege of holding one of the industry’s most extensive libraries of TV and film titles.
Paramount Global (NASDAQ:PARA) demonstrated a strong performance in the second quarter. Revenue increased 13% year-over-year, with subscription revenue growing 12%, advertising revenue growing 16%, and Paramount+ revenue growing 46%, year-over-year. Paramount+ is leading the industry in domestic sign-ups for the fourth year in a row. Additionally, Paramount is advancing its strategic plan including at least $500 million in annualized cost savings and transforming streaming to accelerate profitability.
Paramount Global (NASDAQ:PARA) is one of the best streaming and TV stocks to invest in as a leading provider of premium content alongside its extensive reach and a promising portfolio of brands.
5. Warner Bros. Discovery, Inc. (NASDAQ:WBD)
Number of Hedge Fun Holders: 48
Warner Bros. Discovery, Inc. (NASDAQ:WBD) is a premier global media and entertainment company. The company creates and distributes the most differentiated portfolio of content and brands across television, film, and streaming. WBD serves consumers globally through content that informs, entertains, and inspires.
WBD boasts one of the largest collections of owned content in the world. The firm has a strong position in the industry due to the completeness and quality of assets and intellectual property across news, sports, lifestyle, and entertainment in virtually every region worldwide and in most languages. Some of its most iconic brands include Discovery Channel, discovery+, CNN, DC, Eurosport, and HBO.
The firm saw growing momentum related to its top priority, its direct-to-consumer (DTC) business. Global DTC subscribers were 103.3 million at the end of Q2, an increase of 3.6 million subscribers versus Q1. In the Direct-to-Consumer segment, distribution revenue and advertising revenue increased while content revenue declined. Global DTC Average Revenue Per User (ARPU) 7) increased 4% ex-FX to $8.00. The revenues for the studio segment and the networks segment declined.
Therefore, Warner Bros. Discovery, Inc. (NASDAQ:WBD) leads with its collection of world-leading brands. As of Q2, the stock is held by 48 hedge funds.
4. Comcast Corporation (NASDAQ:CMCSA)
Number of Hedge Fun Holders: 61
Comcast Corporation (NASDAQ:CMCSA) is a global media and technology company. The firm operates with two primary businesses, Content & Experiences and Connectivity & Platforms. While the firm produces, distributes, and streams leading entertainment, sports, and news through its known brands, it also delivers world-class broadband, wireless, and video through Xfinity, Comcast Business, and Sky.
Comcast Corporation (NASDAQ:CMCSA) is a scaled leader with top brands in very large and profitable markets. It has the most beloved brands and networks in the media industry and brings its expansive portfolio of content to viewers worldwide. In TV and streaming, the firm has NBC, Telemundo, Peacock, NBC Sports, Sky Sports, and NBC Olympics to offer. NBCUniversal reaches more than 100 million US households, almost 80% of the population every quarter with its content.
For the second quarter, Comcast expanded its adjusted EBITDA margin across Connectivity & Platforms to a record-high 41.9%. Adjusted EBITDA for Content & Experiences decreased due to declines in Theme Parks and Studios, partially offset by growth at Media. Media Adjusted EBITDA increased 9.0% to $1.4 billion as a result of Peacock delivering the best year-over-year improvement in adjusted EBITDA for any quarter since its launch in 2020. Peacock Revenue increased 28% to $1.0 billion.
In conclusion, Comcast Corporation (NASDAQ:CMCSA) has a scaled and strong domestic network as a major differentiator in addition to its robust businesses. As of Q2, the stock is held by 61 hedge funds.
3. Spotify Technology S.A. (NYSE:SPOT)
Number of Hedge Fun Holders: 88
Spotify Technology S.A. (NYSE:SPOT) is known for providing audio streaming services worldwide. The platform launched in 2008, moved into podcasting, and brought a new generation of listeners to the medium. Spotify made its way into the next audio market primed for growth with the addition of audiobooks in 2022.
Spotify serves as the most popular audio streaming subscription service globally with over 626 million users, including 246 million subscribers in over 180 markets. Other than boasting a robust list of premium plans globally, the firm is introducing new subscription plans to give subscribers more listening choices with options like the Audiobooks Access and Basic tiers. Subscribers can now access more than 6 million podcasts, 250,000 audiobooks, and almost the world’s whole music catalog.
Spotify Technology S.A. (NYSE:SPOT) recorded a good Q2 with healthy subscriber gains, record profitability, and improved monetization. Total revenue grew 20% year-over-year to €3.8 billion and operating income finished at a record high of €266 million. Monthly active users grew 14% and premium subscribers grew 12%, year-over-year. Spotify also unveiled new experiences by expanding video podcast catalog to over 250,000 shows, introducing a new Basic plan in Australia, the UK, and the US for ad-free music listening without audiobook listening time, and incorporating over 250,000 audiobook titles into its Premium offering in Canada, Ireland, and New Zealand.
The firm’s recent quarter marked three consecutive quarters of profitability. Spotify remains a good deal by giving access to all of the content that would normally cost a user approximately $26 in the US, which is significantly more than a Spotify subscription. While Spotify Technology S.A. (NYSE:SPOT) has a strong penetration and broad awareness in developed markets, the firm has huge potential to attract a mass of new users in its developing markets.
2. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fun Holders: 92
The Walt Disney Company (NYSE:DIS) is a leading diversified international family entertainment and media enterprise that includes three core business segments namely Disney Entertainment, ESPN, and Disney Experiences. Disney Entertainment encompasses the firm’s full portfolio of entertainment media and content businesses globally, including streaming. ESPN encompasses ESPN networks, ESPN+, and the firm’s international sports channels while Disney Experiences brings Disney’s stories and characters to life through consumer products, theme parks, cruise and vacation experiences.
Disney has evolved from a cartoon studio in the 1920s to a leading entertainment industry player. As the company builds streaming into a profitable growth business over the long term, the combination of a broad brand portfolio and exceptional content is the key to success. In the most recent quarter, the company achieved profitability across its combined DTC streaming businesses. The firm is improving the quality of its flagship direct-to-consumer streaming service, Disney+. For this purpose, it has taken initiatives like the integration of Hulu content on Disney+ and the introduction of playlists to Disney+ starting on September 4 for US subscribers.
Disney+ offers an extensive collection of exclusive originals including feature-length films, documentaries, live-action and animated series, and short-form content. It serves as the exclusive streaming home for the most recent releases from The Walt Disney Studios and has unprecedented access to Disney’s long history of incredible film and television entertainment. As of March 2024, Disney+ has over 153.8 million subscribers, and over 13,000 shows and movies across more than 150 markets.
For its third quarter ended June 29, 2024, The Walt Disney Company (NYSE:DIS) reported strong double-digit percentage growth of 19% for total segment operating income and 35% for adjusted EPS. Regarding the recent company update, The Walt Disney Company Board of Directors has named James P. Gorman as Chairman of the Board, effective January 2, 2025, who will be succeeding Mark G. Parker. The company also expects to make the critical announcement about the new CEO which is expected in early 2026.
The Walt Disney Company (NYSE:DIS) has an unrivaled and solid portfolio, a strength which has been evident in the firm’s success as well as results. As of Q2, the stock is held by 92 hedge funds.
1. Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fun Holders: 103
Netflix, Inc. (NASDAQ:NFLX) is a global streaming entertainment service with 283 million paid memberships in more than 190 countries enjoying TV series, films, and games across various genres and languages. Netflix started its journey in 1997 as a DVD-rental-by-mail firm and began streaming in the US in 2007 and internationally in 2010 while it became global in 2016.
With streaming entertainment replacing the linear TV experience potentially for an enduring period, Netflix expects to be one of the leading firms of the streaming entertainment era. The firm has been at a scale where it can economically create original content for Netflix since 2013 thereby reaping the benefits of originals. Netflix, Inc. (NASDAQ:NFLX) has a major advantage over its linear competitors as its shows don’t compete for scarce prime-time slots like on linear TV. Furthermore, the reach is vast with Netflix being virtually everywhere except for Russia and China.
In the third quarter, revenue grew 15% year-over-year. The firm delivered multiple hits in the quarter including The Perfect Couple, Nobody Wants This, Emily in Paris, and CobraKai. Engagement remains strong with view hours per member amongst owner households increasing year-over-year through the first three quarters of 2024. Netflix is simultaneously improving its advertising business, with ads membership up 35% quarter-on-quarter and ad-tech platform set to launch in Canada in Q4 and more broadly in 2025.
Netflix is well-positioned to bring engaging stories from many cultures to people globally with its global distribution. The firm is all set to benefit from the universal appeal for high-quality storytelling that transcends borders amidst the growing ubiquity of the internet. The firm remains excited about its Q4 slate including Squid Game S2, the Jake Paul/Mike Tyson fight, and two NFL games on Christmas Day. With a steady drumbeat of hit titles from countries globally, healthy member engagement, and a large strong core business, Netflix, Inc. (NASDAQ:NFLX) is poised for growth.
While we acknowledge the potential of NFLX as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than NFLX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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