After months of debates and what seemed like a never-ending election day, the race for the presidency has finally been called. Of course, this year has been arguably one of the most unusual in history due to the novel coronavirus. On top of that, the two presidential candidates were locked in one of the most contentious elections in recent memory. So, it’s still uncertain how the election will impact the stock market long-term. Many investors are already revisiting their strategies accordingly. However, despite the uncertainty, streaming stocks stand to do well either way.
That’s because people will be looking for some post-results escapism after another grueling election cycle. Lockdown restrictions have already led to a record increase in streaming numbers across the world. Viewing habits have evolved, with people spending twice as much time streaming as they did earlier. For example, in the second week of March, streaming accounted for 23% of TV viewing time, a sharp increase from 2019. As a result, over-the-top media (OTT) platforms have seen a massive number of new user signups, pushing revenues up by a healthy margin.
So, let’s look at three of the best streaming stocks you can count on amidst the post-election hullabaloo.
Streaming Stocks to Buy: Netflix (NFLX)
Netflix is one of the pioneers of the subscription-based streaming service model and has become a household name when it comes to streaming stocks. Currently, the industry leader has a market capitalization of over $200 billion. What’s more, in the global pandemic, Netflix has rode high on the tailwinds of the entertainment sector. NFLX stock’s six-month returns are now around 9%.
The company’s recent third-quarter report does have some investors worried, though. With lockdown restrictions easing, Netflix was only able to get 2.2 million new people on its platforms. The company did best its revenue targets by generating $6.44 billion compared to estimates of $6.38 billion. However, other metrics lagged behind expectations, with earnings per share 18% lower than estimated.
Of course, it’s too much to expect Netflix to reach the numbers it touched in the first half of the year. Lockdown restrictions were in full effect then, creating an ideal consumer base for the company. However, with the recent resurgence of Covid-19 cases and some of the major countries closing down, new signups could still increase exponentially. Moreover, with winter fast approaching in different parts of the world, streaming numbers can be expected to rise.
Amazon (AMZN)
Online retail giant Amazon has been on a tear since the start of the pandemic — the company is currently growing at more than 30% year-over-year, having success across all of its segments. Of course, we all know about Amazon’s retail competencies. But the company has also been killing it with its streaming service offerings. That makes it one of the more attractive streaming stocks.
Specifically, Amazon’s Prime subscription service — which includes a wide variety of entertainment services, coupons, and exclusive products — is growing rapidly. Hence, one of the major future growth catalysts for AMZN stock will be the company’s Prime subscription service. In fact, we are already seeing its benefits now.
Revenues from Prime memberships grew at an impressive 33% to $6.58 billion in Q3 this year. Reportedly, Amazon had 150 million Prime members in January, a number that is only increasing with the pandemic. Moreover, Prime video numbers are also growing, accounting for 23% of subscription video on demand (SVOD) purchases in Q2.
Essentially, this platform continues to improve its content, user experience, and features in order to beat the competition. What’s more, the comprehensive package Amazon offers gives the stock a great edge in the market.
Roku (ROKU)
Roku is one of the pioneers in digital media streaming, which allows the streaming of a wide variety of content in multiple formats. The company has evolved from purely hardware-based to a robust software and advertising platform. As such, ROKU stock is one of the best-performers in the sector, boasting a six-month return of 67%.
On top of that, Roku also recently reported its third-quarter results, which beat top- and bottom-line expectations. Revenues increased 73% and rose to $451 million. Gross profits increased 81% and operating income shot up to $12 million, compared to a year-ago loss of $26.5 million. Streaming hours rose 200 million hours to 14.8 billion. Finally, average revenues per user increased 20% year-over-year to $27.
Roko’s mission is to connect the entire TV ecosystem and make it easier for content producers to showcase their work worldwide. Moreover, it hopes to become a dominant player in advertising through its new OneView ad platform. Clearly, Roku is already making waves in its industry, qualifying it as one of the most promising streaming stocks on the market right now.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University. He does not directly own the securities mentioned above.
