Media giants Disney and Netflix have both proven to be successful companies over the years, but though one stock has been a largely steady performer, the other has been a star. » Subscribe to CNBC Make It.:
Which company’s stock would have made you richer if you invested 10 years ago, though? The answer is Netflix — by a lot. According to CNBC calculations, a $1,000 investment in Netflix on April 23, 2009, would be worth more than $58,000 as of April 23, 2019, for a total return of over 5,700%.
If you put $1,000 in Disney over the same period, your investment would be worth about $7,700, a total return of over 680%. During the same time period, the S&P 500 returned 320%.
The difference between the two investments comes to more than $50,000.
While Netflix would have made you more money, any individual stock can over- or underperform and past returns do not predict future results. After Disney’s announcement, in fact, Netflix shares fell 4.5%. (The company reported quarterly earnings per share and revenue last week that beat estimates, though, and the stock is up more than 34% year to date.)
Disney+ will start at $6.99 a month, or $69.99 a year, and allow users to stream much-loved material from its archives as well as original content hooked to the Pixar, Marvel and “Star Wars” universes. It will be cheaper than Netflix, which recently raised its prices to $12.99 per month for its standard plan.
Disney’s chairman and chief executive officer, Bob Iger, told CNBC that he was “optimistic” about the streaming service “because of the content, the user interface and the price.”
Jim Cramer, host of CNBC’s “Mad Money,” said he was excited about Disney based on Disney+. “It’s a reasonable price. You have an unbelievable library. We have all bought these,” he said. “I’ve bought every single property of Disney. [For] my kids, it just was kind of a rite of passage.”
Iger, he added, “has transformed this company back to a growth stock in a way that people are saying, ‘Finally, I’ve got one with earnings, with a balance sheet, with a great CEO; I don’t have to risk it anymore.’ That’s what this story is.” Overall, he concluded, “Wow. Wow. Big.”
Not everyone is sold on Disney’s plan, though. Some analysts believe that the company’s goals are too lofty and that it will be difficult for its streaming service to disrupt major players like Amazon, Apple and, most notably, Netflix.
“We do not view Disney+ as a strong alternative to Netflix, ” Matthew Thornton, a tech analyst at bank holding company Suntrust, said in a note. “Disney+ features family content, while Netflix offers a much broader range of content with the majority of the most-searched content on the platform.”
J.P. Morgan analyst Doug Anmuth agreed, saying in a note that “while we expect Disney+ will likely be the most competitive streaming offering to Netflix, we still do not view it as a major threat to Netflix subscriber numbers given Netflix’s quality & quantity of content. ”
Netflix had more than 148 million total subscribers as of February, and some analysts predict that number will grow to 335 million by 2028. By comparison, Disney+, which will officially start streaming in mid-November, expects to reach 60 million to 90 million subscribers by 2024.
If you’re looking to get into investing, seasoned investors like Warren Buffett suggest you start with index funds, which hold every stock in an index, meaning they’re automatically diversified and tend to be low cost. Plus, because they fluctuate with the market, they’re typically less risky than picking individual stocks.
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Disney vs Netflix: Here’s which would have made you richer if you invested $1,000 10 years ago | CNBC Make It.
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