Pandemic Boosts Spending on Streaming Services: 4 Stocks to Watch
Video streaming services have had a great 2020 thanks to the pandemic that kept millions at home with no other option for entertainment but watching videos online. Moreover, the pandemic also coincided with the launch of a number of video streaming services, which cashed in on the situation by immediately adding millions of subscribers that gave a boost to their revenues.
The pandemic saw both small and big players competing to increase their user base of a captive audience that resulted in higher average household spending on streaming video services. And the situation is likely to continue as the crisis is far from over.
Spending on Subscriptions Increases
According to a new survey by J.D. Power, the average U.S. viewer in December was paying $47 per month for all their subscriptions compared to $38 in April 2020. This is a substantial jump given that video streaming gained immense popularity during the pandemic.
Also, the report says that viewers added more services to their streaming services bouquet during the pandemic. Many increased their streaming subscription to four services in December 2020 from three in April 2020.
Another big reason behind this jump in subscription spending is increasing options. Prior to 2020, there were only three major players, which have now doubled in less than a year. Naturally, this has also been boosting competition.
Streaming Services Set to Grow in 2021
A number of video streaming services were launched at the end of 2019, followed with a couple more in 2020. Most of them have been succeeded in adding thousands of subscribers within weeks.
Netflix, Inc. NFLX has been the biggest gainer during the pandemic, with its subscribers growing at a faster rate than its rivals initially. It has been spending aggressively on building its original show portfolio. More users mean more subscription, which has been boosting their revenues.
The launch of new streaming services has also giving cable TV services a run for their money. Cable TV was already suffering and it only got worse during the pandemic. According to investors.com citing a Leichtman Research Group report, the first three quarters of 2020 saw all big pay-TV service providers losing 3.75 billion subscribers.
Moreover, many media companies that have been waiting to release their movies in theatres have started to release them on OTT platforms, which have further been helping the streaming industry.
Stocks in Focus
Streaming services are one of the rare few that is benefiting from the coronavirus pandemic, which has kept billions of people at home with nothing to do but stream. This thus makes an opportune time to invest in video and music streaming stocks.
Netflix, Inc. is considered a pioneer in the streaming space. It has been spending aggressively on building its original show portfolio. The company added more than 8.5 million paid subscribers in the fourth quarter.
The company’s expected earnings growth rate for the current year is 58.2%. The Zacks Consensus Estimate for current-year earnings has improved 8.3% over the past 60 days. The company currently has a Zacks Rank #2 (Buy).
Apple, Inc. AAPL launched its streaming services last year and has gained immense popularity since then. The company reportedly has more than 30 million TV subscribers. Recently, the company announced that it will also be offering a bundled service, which is likely to further boost its subscriber figures.
The company’s expected earnings growth rate for the current year is 36.3%. The Zacks Consensus Estimate for current-year earnings has improved 11.5% over the past 60 days. Apple sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Amazon.com, Inc. AMZN,besides being an e-commerce giant, offers several other services. Amazon Prime, a membership program, provides access to streaming of movies and TV episodes among other services, and is one of the market leaders in the streaming space.
The company’s expected earnings growth rate for the current year is 50.5%. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the past 60 days. Amazon carries a Zacks Rank #3 (Hold).
Comcast Corporation’s CMCSA Peacock video streaming service boasts more than 33 million paid subscribers in less than a year of its launch. Peacock has three tiers of service: Free, Premium and Premium Plus. Peacock also offers a lineup of around 25 curated digital linear channels, featuring long-form and digital-originated programing content from NBCUniversal's broadcast and cable properties as well as third-party content providers.
The company’s expected earnings growth rate for next year is 11.9%. Comcast shares have gained 21.5% in the past three months. It carries a Zacks Rank #3.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>
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