Market Overview

Disney's 50M Streaming Subscribers No Reason To Celebrate: Here's Why

Share:
Disney's 50M Streaming Subscribers No Reason To Celebrate: Here's Why

Walt Disney Co (NYSE: DIS) said last week its new streaming video service Disney+ has 50 million subscribers, but this is no reason for investors to celebrate, according to Strategic Wealth Partners Mark Tepper.

Streaming Unprofitable Business

Disney's management previously guided for 60-90 million subscribers by 2024 so announcing 50 million subscribers in 2020 certainly puts the company "way ahead" of schedule, Tepper said on CNBC. However, the streaming unit accounts for less than 10% of its total business and remains unprofitable.

Meanwhile, Disney has to navigate through some "serious headwinds" as 40% of its business is derived from parks. The unit will likely remain under pressure for longer than many assume and attendance will be low until the coronavirus is resolved with a cure or vaccine.

"Do you really want your kids touching a ride that 100 other kids touched that day?" Tepper asked. "Probably not. So I'm concerned the attendance at parks might be weak for another year or so."

Media and studio make up another 40% of Disney's business and it's unclear if consumers will return to theaters in three or six months, he said.

See Also: Roku Vs. Netflix: Needham's Laura Martin Sees A Clear Quarantine Winner

Buy Netflix Instead

Tepper said he was a seller of Disney's stock under the assumption it can be re-bought at a lower level. Instead, Netflix Inc (NASDAQ: NFLX) offers investors a pure-play on streaming video.

Netflix boasts a major advantage over Disney in its original content that is binge-watching friendly. By comparison, Disney's platform is full of "a bunch of reruns and old movies and stuff like that," Tepper said.

 

Related Articles (DIS)

View Comments and Join the Discussion!

Posted-In: Disney Plus Disney+ Mark Tepper Strategic Wealth Partners streaming videoAnalyst Color Tech Media Best of Benzinga

Latest Ratings

StockFirmActionPT
INTCJP MorganMaintains70.0
STMCanaccord GenuityMaintains47.0
ELDeutsche BankMaintains248.0
UAADeutsche BankMaintains13.0
INTCDeutsche BankMaintains55.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com