Content is king, and with so many competing in the media market, it’s hard to stand out.
But three big names are thriving, and it’s no wonder why.
Roku (NASDAQ: ROKU)
Streaming pioneer Roku (NASDAQ: ROKU) was one of the biggest IPOs of 2017, and has since more than quadrupled in price since going public.
The streaming device space is a crowded one with big names like Amazon (NASDAQ: AMZN) with its Fire TV, Google with its (NASDAQ: GOOGL, GOOG) Chromecast, and Apple (NASDAQ: AAPL) with its Apple TV device. But while each of these devices will communicate with some rival offerings, what sets Roku apart is that it is service-agnostic and integrates with everyone.
Roku devices offer thousands of channels and services like Netflix and DirectTV Now within an interface that’s easy to navigate and with hardware that’s easy to install. So while the likes of Amazon, Google, and Apple fight to win consumers over, Roku is quietly and rapidly stealing marketshare.
In Q2, Roku delivered top line growth of 57% as its revenue grew at twice the rate it did a year ago. The company now boasts over 22 million active users on its media players and on smart TVs that now come preinstalled with the Roku operating system.
What’s more, those users consumed 5.5 billion hours of content – 57% higher than the same period last year. And not only that, but the company saw 48% growth in average revenue per user demonstrating that user monetization is climbing, and platform revenue grew 96% year-over-year to $90.3 million.
Earlier this month, analysts at KeyCorp boosted their 12-month price target for the stock to $67 – nearly 12% higher than today’s price. But if Roku is able to continue to gain marketshare and monetize its rapidly growing user base, its price could continue to rise higher for the long term.
Netflix (NASDAQ: NFLX)
Netflix (NASDAQ: NFLX) took a tumble last month after it reported adding 1 million fewer users in Q2 than Wall Street anticipated.
But the stock is up nearly 10% this week as investors have fallen back in love with Netflix.
“We’d be a buyer of this stock,” Craig Johnson, chief market technician at Piper Jaffray, told CNBC. “The primary trend is still up. This is just what I would define as a correction within the context of a longer-term uptrend.”
“The next two resistance levels come in around $370 and then a little bit more at $380 before you get back to the old highs, but we would be buying in this dip,” Johnson said.
But what makes Netflix unique from other streaming platforms is that it is the king of and pioneer of binge watching which has given it insights into its viewers that are hard to compete with.
The company has a decade’s worth of streaming data giving it massive amounts of raw information on what users like and dislike, which gives it the ability to better predict what those viewers might want to binge on the platform next.
In essence, Netflix knows you.
Netflix has 130 million streaming subscribers—up from 104 million a year ago—and those users consume a lot of content, all of which is trackable. And with that tracking, Netflix is better to able to recommend content based on not only what you have watched, but also based on what other users like you have watched.
Imperial Capital gave NFLX an outperform rating with a price target of $494, 33.5% higher than Thursday’s closing price. And with the price still down from early July highs, now is a good time to buy.
Walt Disney Company (NYSE: DIS)
Disney (NYSE: DIS) is responsible for some of the highest-grossing movies of the last few years.
Titles like Avengers: Infinity War, Black Panther, and Incredibles 2 have been massive box office hits, and Disney also owns some of the most popular movie franchises, including Star Wars.
Disney has been smart in its acquisitions of Lucasfilm, Marvel, and Pixar, but what really sets the company apart is its ability to promote its releases throughout its various businesses.
The company is the world’s largest theme part operator, so when a new movie is coming out, visitors see the franchise promoted within the park. There’s also the Disney Store’s hundreds of locations where merchandise for new releases is heavily promoted. And then there’s the cross promotions Disney can do on its owned channels ABC, ESPN, and the Disney Channel.
This promotional machine is largely unstoppable, ensuring Disney’s films deliver huge returns at the box office and beyond – hello, merchandise.
Early this month, Bank of America issued a Buy rating on DIS with a 12-month price target of $144 – nearly 30% higher than today’s prices. But Disney’s assets ensure that this media giant will be a winner for years to come.