Netflix Stock – 1 Streaming Stock to Buy and 1 to Avoid By StockNews
© Reuters. 1 Streaming Stock to Buy and 1 to Avoid
The rising popularity of entertainment content streaming services over the past year has allowed companies in this space to generate significant returns. However, not all players in this industry have been able to capitalize on the tailwinds. We think collaboration with popular companies and lower-cost subscription choices should help Netflix (NFLX) deliver solid returns in the near-term. But Roku (NASDAQ:), in contrast, has failed to assert dominance in a highly competitive industry. Let’s discuss.The heightened demand for in-home entertainment allowed over-the-top (OTT) media services to expand their customer bases and grow significantly last year. Owing to improved quality and innovative content, as well as the creeping redundancy of traditional cable channels, global streaming subscriptions have increased 26% year-over-year to surpass 1.1 billion last year.
Furthermore, rising investor interest in streaming companies is evidenced by the iShares Evolved U.S. Media and Entertainment ETF’s (IEME) 60.3% returns over the past year, compared to SPDR S&P 500 ETF Trust’s (SPY) 42.9% gains.
The global video streaming services market is expected to grow at an 11% CAGR over the next five years to reach $108.31 billion by 2025. We believe popular subscription-based streaming service provider Netflix Inc. (NASDAQ:) is well-positioned to benefit from this heightened demand. However, because of declining financials and low-rated shows, we think Roku, Inc. (ROKU) might struggle to stay afloat.
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