The halo effect is still alive and well. With Netflix (NASDAQ:NFLX) releasing earnings, a slightly surprising boost kicked in for two of its biggest competitors: Disney (NYSE:DIS) and Paramount (NYSE:PARA). All three are up in Friday’s trading.
When Netflix released its results yesterday, earnings and revenue numbers were better than expected, but not necessarily a big surprise. However, what really struck investors was the gain in subscriber counts. Netflix was quick to caution that paid adds might look strange in the near future as the hammer comes down on password sharing. Yet, there were still enough new subscribers to get investors interested, even as Netflix cut back on content spending in 2022.
One of the biggest issues facing any streaming service is subscription fatigue, which is when customers subscribed to multiple services simply pull their subscriptions, or focus on one. Some even referred to streamers as a new kind of nomad. They would subscribe long enough to view all the new content and then cancel a subscription and proceed to the next service to enjoy its new content. However, Netflix’s huge subscriber gains suggest that there may not be as many streaming nomads following new content as some feared.
All three streaming brands were up today, and each will offer a fairly different prospect for investors. For instance, Paramount stock is the only one of the three with downside risk, thanks to its $19.13 average price target. However, Disney stock—considered a Strong Buy—offers 15.66% upside potential thanks to its average price target of $119.15.
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