The coronavirus has greatly affected businesses around the world. Some areas have gone into the shadows, while others, on the contrary, have become leaders. One of these industries is streaming TV, which entertained the public while there was a lockdown. Market participants who have considered investing in broadcasters are certainly considering Disney+ and Netflix.
The background for these companies is that both businesses are growing. The difficulties faced by the House of Mickey Mouse with the closure of amusement parks due to quarantine measures to combat the coronavirus do not prevent investors today from focusing on the assumptions of positive profit growth of this entertainment titan.
As the number of vaccinated people increases, theme parks open, and the Disney+ streaming platform increases the popularity of content, creators can count on significant profits. Netflix is also moving forward. In addition to video materials in the content, the company plans to create computer games.
Let's see if it is possible to invest profitably in the securities of these companies now?
Grown-up Netflix
For a long time, Netflix securities held strong positions and were considered profitable in the market. Their annual growth since 2002 has been on average about 40%. But now the company is at a new stage of "mature business". The key focus of the market, which includes, for example, the North American market, is now slowly growing. New subscribers are not very active: their increase over the past year is very small – less than 10%. But the company still has opportunities to enter global markets. Today, more than half of the buyers live here, although it is still far from 100% coverage of this market.
As Hollywood studios and cable operators begin to restore their work in the media broadcasting market, the analyzed service is becoming more and more profitable.
Perhaps this trend can lead to the fact that pay TV will fade into the background, and streaming platforms will become more popular among users. For investors, there is one main point-the new service is mainly broadcast in the United States, and accordingly Netflix is not so bad.
The profitability of the business is growing as the number of new subscribers slows down. Netflix experts predict that the operating margin could grow from 18% to 20% this year, about 3% next year and 29% by 2024.
It is already clear that Netflix is turning into a profitable enterprise. The streaming service's business model has pursued this goal since its inception. For this purpose, a high margin was formed, and the funds from the additional profit were added to the net profit. The increase in revenue can be achieved by changing the pricing policy, and not only by attracting new subscribers. This is already happening in America and, thus, determines the profitability of the company. In addition, the increase in prices will affect the increase in margins. Now it is unlikely that the issuer will achieve an increase in prices for its securities of 40%, but Netflix is still a strong leader in the streaming market.
Disney Restoration
Like other enterprises, Disney could not avoid the consequences of the epidemic. We all remember that cinemas, amusement parks and resorts were closed, and sports events were suspended. And even under these conditions, some parks have now restored their work and are accepting customers, although their work is still far from being fully implemented.
This did not become a negative factor for investors, and when Disney+ appeared, the value of the company's securities became a record. Disney+ streaming events are Hulu, ESPN+, Star in the global market and Hotstar in the Indian television market. Disney predicted 60-90 million users of the Disney+ service by 2024, but they were able to make this figure faster – in one year. Now experts believe that this year the number of new customers will be 300-320 million.
It is impressionable that Disney+ does not seek to develop in accordance with the original content. After streaming television was launched with the production program The Mandalorian, the company's management decided to switch to broadcasting not only its content, but also the production of Marvel, Star Wars, Pixar and other novelties. Disney is very confident in the streaming business, so it is ready to release two hits at the same time Black Widow and Cruella at the same time in cinemas. For a fee, they can be reviewed on Disney+.
In the short term, streaming can be considered as the main engine of Disney's growth. It is important for depositors that there are opportunities for economic recovery, and when travel becomes the safety standard again, amusement parks are likely to pay off.
Risks of companies
In 2020, the entertainment industry has become fast-growing, especially after the COVID outbreak. As a result, the securities of the issuers presented in our material also increased. At the moment, the growth of vaccination of people has led to the fact that people from different countries prefer active recreation, and the possibility of subscribing to streaming programs is becoming less popular. It is likely that as the quarantine continues to decrease, subscribers may refuse to stream video, which is a negative factor for both companies.
In the short term, the enterprises under consideration may suffer due to increased competition in the market, a reduction in the number of customers and delays in publishing content.
Netflix and Disney are big entertainment companies, and both have good opportunities for a return on investment. Both companies are investing heavily in the development of their industry. Disney has an advantage over Netflix-theme parks and specialized retail outlets.
If you think that Netflix can get a large part of the streaming market thanks to not yet some secret plans, choose Netflix papers.
For those who are interested in companies with different profitable segments in their portfolio, we recommend taking a closer look at Disney.
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Gold exchange rate forecast for today. The banking metal is still very sensitive to the dollar. The next signal for the market is the US unemployment rate for March. If the current value comes out better than the forecast, then there will be an additional reason for the Fed to reduce the purchase of securities.The US stock market ended Wednesday trading lower on the back of negative dynamics from the consumer services, technology and finance sectors. At the close on the New York Stock Exchange, the Dow Jones fell by 0.19%, the S&P 500 index fell by 0.63%.At the same time, there is an increase in inflation. Consumer prices in Germany, harmonized with EU standards, increased by 7.6% in annual terms in March, according to preliminary data from the country's Federal Statistical Office (Destatis).Analysts surveyed by Bloomberg, on average, predicted a rise of 6.8%. Trading Economics experts expected growth of 6.7%. In February, inflation in the country was 5.5%.As for Japan, retail sales in February decreased by 0.8% compared to the same month last year, according to data from the country's Ministry of Economy, Trade and Industry. The drop was recorded for the first time since September last year. Analysts on average expected a decline of only 0.3%. 
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