3 Sorry Streaming Stocks to Sell in May While You Still Can


  • You have to feel sorry for the following video streaming stocks to sell as they feel the full extent of the competitive pressures in the industry.
  • Warner Bros. Discovery (WBD): High debt, cost cuts and other efforts could help drive profits but weigh on subscriber growth.
  • Paramount (PARA): Paramount+ may need to team up for bundling opportunities as debt and headwinds bite.
  • Comcast (CMCSA): Peacock has been strong of late, but only time will tell how long that will last, as other parts of the business feel the heat.
streaming stocks to sell - 3 Sorry Streaming Stocks to Sell in May While You Still Can

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The video streaming scene is a tough place to be these days unless, of course, your name is Netflix (NASDAQ:NFLX). Undoubtedly, with the number of new rivals on the scene, many would have thought that Netflix’s moat would have been fully eroded by now as new entrants grabbed away subscribers and economic profits from them. Not only has Netflix held its own, but it’s also showing glimmers of magnificence again.

There’s still plenty of lifetime value in streaming subscribers. Occasionally, some may be inclined to pause or churn (that entails pausing one subscription for another based on what catches one’s interest). Still, the key takeaway is that value proposition can prevent such.

Netflix hasn’t only defended itself well amid numerous industry changes (think the pivot toward ad tiers). Still, it’s also been able to apply pressure to the new entrants, many of whom are finding out that streaming is a very tough and expensive place to be.

For the firms that aimed to rival Netflix, it seems time to backtrack and trim costs to enhance profitability. However, such efforts will come at the cost of subscriber growth, especially as consumers cut back. These are the streaming stocks to sell in May.

Warner Bros. Discovery (WBD)

The logo of the new Warner Bros Discovery (WBD) company on smartphone screen.
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Warner Bros. Discovery (NASDAQ:WBD), home of Max, formerly HBO Max, is a solid streaming platform for new streamers enticed by the slate of content. Indeed, HBO has some of the highest-rated series, from House of Dragon to Last of Us.

Despite the hit series, there isn’t as much content as I’d like to justify staying subscribed for the long haul. You could easily binge a wonderful series throughout the weekend. Then what? It’s time to cancel, especially if the monthly budget needs some trimming amid inflation.

A few high-rated films or TV shows won’t cut it. To keep streamers engaged for the long haul, there must be a deeper pipeline of new content and a library of older content. Otherwise, beware of churn.

Though I’m a fan of Warner Bros. Discovery’s content, I’m not a fan of the company’s debt load or recent production cutbacks. I have no idea how the company will grow and keep subscribers while it’s in cost-cutting mode.

Yes, pulling back on mounting losses and debt reduction is important, but to thrive in streaming, it’s my humble opinion that you need to go big or be left behind. For now, I’m passing on WBD stock, even if it looks extremely undervalued at around 0.4 times price-to-book (P/B) and price-to-sales (P/S).

Paramount (PARA)

In this photo illustration, the Paramount Global (PARA) logo is displayed on a smartphone screen
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Paramount (NASDAQ:PARA) is another media and streaming player treading water lately. Warren Buffett’s Berkshire Hathaway (NYSE:BRK-A, BRK-B) is out of the name, and deep-value investors may also wish to consider cutting losses.

Recent talks of a potential takeover have brought hope to some PARA stockholders. However, it’s unclear if a deal will ever get inked, with Sony Group (NYSE:SONY) reportedly having second thoughts about its bid to buy (all of or just a piece of) Paramount.

Paramount has issues that a bigger player like Sony Pictures could better manage. That said, I’m not one for speculating on takeovers. And if no buyer commits to a takeover, I find it hard for PARA stock to turn things under its power.

There’s $15.8 billion in total debt on the balance sheet — a seriously high amount for a company with an $8.3 billion market cap. Unfortunately, the debt load could tie Paramount’s hands as it sails through the hostile streaming waters.

Comcast (CMCSA)

Keeping NBC News on the Air Could Hamper Comcast Stock
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Comcast (NASDAQ:CMCSA) is a media giant behind the Peacock streaming service. For Q1 2024, Peacock saw 54% in year-over-year sales growth. As impressive as the growth, it won’t last too long, especially in today’s rocky streaming climate. Indeed, we’ve seen this story with other non-Netflix streamers: a subscriber boom out of the gate followed by impressive growth for some time and, eventually, a significant drop-off.

Only time will tell if Peacock can keep growing once it’s ready to push it to profitability. The streaming platform is still losing money and could continue to do so for some time. In any case, Comcast has deep enough pockets to focus on innovating and adding value for customers. Given its streaming strategy, impressive Peacock growth, bundling opportunities and a higher tolerance for streaming losses, CMCSA stock is better than the other two streamers in this piece.

I’m inclined to pass on shares as negative momentum picks up again. The stock goes for 10.2 times trailing price-to-earnings (P/E). Despite racking up the losses, Peacock stands out as a bright spot for Comcast. However, there’s the rest of the business (think broadband and cable) to worry about as it feels considerable pressure.

On the date of publication, Joey Frenette held shares of Berkshire Hathaway (Class B). The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joey Frenette is a seasoned investment writer specializing in technology and consumer stocks. Contributing to the Motley Fool Canada, TipRanks, and Barchart, Joey excels in spotting mispriced stocks with long-term growth potential in a fast-paced market.

Article printed from InvestorPlace Media, https://investorplace.com/2024/05/3-sorry-streaming-stocks-to-sell-in-may-while-you-still-can/.

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