In this article, we discuss the 10 best streaming stocks to buy now.
Streaming stocks featured as ‘star-performers’ during the Covid pandemic, as millions forced to stay home turned towards digital mediums for entertainment. For the last several years, Netflix, Inc. (NASDAQ:NFLX) was by far the undisputed leader in the streaming market. But in April 2022, the firm reported subscriber loss for the first time in a decade. This pointed to how big names such Amazon.com, Inc. (NASDAQ:AMZN), The Walt Disney Company (NYSE:DIS), and Apple Inc. (NASDAQ:AAPL) have spent billions on launching and propping up their own streaming platforms, becoming fierce rivals in a market some say is near saturation. Spending on streaming content by these streaming giants reached $220 billion in 2021, and is set to cross $230 billion in this year.
Another phenomenon behind Netflix, Inc.’s subscriber loss is the return to pre-pandemic normalcy for millions across the globe, giving users less time and opportunity to binge-watch their favorite shows at home. However, users, investors and critics all realize that streaming is the future of digital entertainment. According to a 2021 report by West Monroe, the average consumer in the United States spends an average of $273 per month on subscription services, which includes streaming platforms, home Wi-Fi, cloud storage, e-books, dating apps and mobile phone services. This was a 15% increase from 2018 levels, highlighting the pandemic’s role in accelerating the economy’s shift towards the online sphere.
The global video streaming market currently stands at roughly $473 billion, and is expected to reach approximately $1.69 trillion by 2029, growing at a compound annual growth rate (CAGR) of 19.9% during this period. Investors would be wise to take advantage of this trend, and put their money behind some of the best stocks in the streaming industry.
Photo by Ashley Byrd on Unsplash
Our Methodology
We examined the streaming industry and picked the top 10 stocks with a high number of user subscriptions, solid business fundamentals, future growth catalysts and positive analyst ratings. Hedge fund sentiment around each stock has been derived from Insider Monkey’s database of 900+ elite hedge funds tracked at the end of the fourth quarter of 2021.
10 Best Streaming Stocks To Buy Now
10. Limelight Networks, Inc. (NASDAQ:LLNW)
Number of Hedge Fund Holders: 11
Limelight Networks, Inc. (NASDAQ:LLNW) is a content delivery network company, which offers backend streaming technology to companies such as Disney and NBC. As these streaming giants continue to pump out more content and increase their viewership, Limelight Networks, Inc. is well-positioned to grow in the coming years as a CDN stock. As of May 18, shares of the firm have soared 14.26% in the last 12 months, and 10.28% in the last 6 months.
On April 28, Raymond James analyst Frank Louthan maintained a ‘Strong Buy’ rating on Limelight Networks, Inc. shares, noting that investors have an attractive buying opportunity if they are willing to focus on the firm’s underlying fundamental performance, and look past the temporary supply-chain issues and uncertainty around the firm’s Ukrainian operations.
Limelight Networks, Inc. in March agreed to acquire Yahoo’s Edgecast, a provider of security, content delivery, and video services. The $300 million, all-stock deal looks set to drive higher sales and an increase in the company’s valuation in the coming months.
For the first quarter of 2022, Limelight Networks, Inc. posted an EPS of -$0.04, in-line with consensus estimates. Revenue of $57.96 million for the quarter outperformed estimates by $1.81 million and showed an increase of 13.21% from the year-ago quarter.
Of the hedge funds tracked by Insider Monkey, 11 held positions in Limelight Networks, Inc. at the close of Q4 2021 with a combined worth of $119.5 million. This is up from 10 hedge funds a quarter ago with $95 million worth of positions in the company. Lynrock Lake was the largest shareholder of Limelight Networks, Inc. at the end of Q1 2022, with 3.45 million shares valued at $18.06 million.
In addition to Netflix, Inc., Amazon.com, Inc., and The Walt Disney Company, Limelight Networks, Inc. is a top streaming stock to buy.
9. iQIYI, Inc. (NASDAQ:IQ)
Number of Hedge Fund Holders: 15
iQIYI, Inc. (NASDAQ:IQ) is the largest streaming service in China, and is often dubbed the ‘Chinese Netflix’. Apart from a range of entertainment content, the firm also provides online gaming and online wallet services. As of the end of 2021, iQIYI, Inc. had around $97 million paid subscribers, almost all of them in China. The firm is a subsidiary of Baidu, Inc. (NASDAQ:BIDU), one of China’s largest tech conglomerates.
On May 16, JPMorgan analyst Alex Yao double upgraded iQIYI, Inc. to ‘Overweight’ from ‘Underweight’ with a price target of $8, up from $2. The analyst notes that the uncertainties plaguing the Chinese internet sector are abating on the back of announcements that regulators are easing their clampdown on the industry. Yao sees “early-cycle sectors” such as digital entertainment, local service, and e-commerce “to be the first batch of out-performers”, and now has a more balanced view on Chinese stocks.
Out of the 900+ hedge funds tracked by Insider Monkey at the close of Q4 2021, 15 reported owning stakes in iQIYI, Inc. with a total value of $358.5 million. At the end of March, Hillhouse Capital Management was the largest shareholder of the Chinese firm, with a $175 million stake consisting of 38.6 million shares.
8. Roku, Inc. (NASDAQ:ROKU)
Number of Hedge Fund Holders: 43
Up next is Roku, Inc. (NASDAQ:ROKU) on our list of the best streaming stocks to buy. It provides smart TV software which allows users to access a range of content and manage their subscriptions in the same platform. At the end of 2021, the firm reported approximately 60 million active users on its platform.
On May 3, Citi analyst Jason Bazinet maintained a ‘Buy’ rating on Roku, Inc. shares and decreased the price target to $175 from $225. The analyst sees the market as less willing to underwrite future growth in current valuations for streaming companies after Netflix reported slowing growth, but sees Roku, Inc. as well-positioned to benefit from the secular trend of ad money moving from linear to connected TVs.
Reporting its first quarter earnings on April 28, Roku, Inc. posted an EPS of -$0.19, which came in above consensus estimates by $0.02. Revenue of $733.7 million for the quarter was above estimates by $15.1 million and beat year-on-year figures by 27.8%.
Cathie Wood’s ARK Investment Management was the largest shareholder of Roku, Inc. at the close of Q1 2022, with 8.27 million shares valued at $1.03 billion. 43 hedge funds held $2.2 billion worth of positions in Roku, Inc. at the close of the fourth quarter of 2021. This is down from 57 hedge funds with $2.82 billion worth of stakes in the firm a quarter ago.
7. Spotify Technology S.A. (NYSE:SPOT)
Number of Hedge Fund Holders: 53
Then there’s Spotify Technology S.A. (NYSE:SPOT), the world’s largest audio streaming platform. It boasts operations in 184 countries around the globe with more than 400 million monthly active users and 180 million premium subscribers.
On April 29, Citi analyst Jason Bazinet lowered the firm’s price target on Spotify Technology S.A. to $165 from $240 and reiterated a ‘Buy’ rating on the company shares. The analyst feels that at the current price levels, the market is not sufficiently valuing Spotify’s emerging businesses and the potential for future growth in its paid music streaming service.
Investors were seen buying into Spotify Technology S.A. shares at the close of the fourth quarter, where 53 hedge funds reported bullish bets on the company shares with aggregate holdings worth $3.46 billion. This is in comparison to 48 hedge funds in the preceding quarter. Disruptive tech investor Cathie Wood’s ARK Investment Management was the most prominent shareholder of Spotify Technology S.A., holding a $662.7 million stake at the close of Q1 2022.
Spotify Technology S.A. posted an EPS of $0.22 for the first quarter of 2022, beating estimates by $0.45. It also beat revenue estimates for the quarter, with the figure of $2.81 billion recording $28.1 million above analysts’ forecasts.
Here is what investment firm Rowan Street Capital LLC had to say about Spotify Technology S.A. in its Q1 2022 investor letter:
“Let’s run through our top holdings in order to visualize what happened to their stocks in relation to the fundamentals of their underlying businesses:
We have owned Spotify (NYSE:SPOT) stock since its IPO year in 2018, and this company continued to be one of our highest long-term convictions despite the recent drawdown in the stock. We had outlined our investment thesis for SPOT in our H1 2021 Letter and in Q2 2020 Letter (we encourage you to review those). We believe there is great future for this company beyond what you can see and hear today!”
6. Warner Bros. Discovery, Inc. (NASDAQ:WBD)
Number of Hedge Fund Holders: 76
Warner Bros. Discovery, Inc. (NASDAQ:WBD) was formed in April 2022 after AT&T Inc. spun off its Warner Bros segment and merged it with Discovery (DISCA). Content kings such as HBO, CNN, Discovery and many movie blockbusters from Warner Bros, all now belong to the portfolio of Warner Bros. Discovery, Inc., making it one of the most exciting streaming stocks to buy now. The newly merged companies boast 100 million in collective subscribers.
On May 12, Cowen analyst Doug Creutz upgraded Warner Bros. Discovery, Inc. to ‘Outperform’ from ‘Market Perform’ with a price target of $24, down from $31. The analyst is cautious on the highly competitive streaming space, and believes the firm’s decision not to overspend in these consumer wars is a sustainable approach as compared to peers. He also notes that the potential to improve the performance of the Warner Bros segment under the management of Discovery is ‘compelling’, and expects the performance of Warner assets to improve.
Laurion Capital Management was the most prominent shareholder of Warner Bros. Discovery, Inc. at the close of Q1 2022, with 13.58 million shares valued at $338.4 million. In total, 76 hedge funds were long on the company shares.
Investment firm Silver Ring Value Partners talked about many stocks in its Q1 2022 investor letter, and Warner Bros. Discovery, Inc. was one of them. The fund said:
“Discovery completed the acquisition of the Warner Media business from AT&T in April, and the combined business is now named Warner Brothers Discovery. We are currently in the middle of an interesting technical event, following the spin-off special situation playbook.
The acquisition was structured as a spin-off of Warner Media, with AT&T shareholders receiving ~ 70% of the shares in the combined entity, or ~ 1.7B shares. Many of these shareholders owned AT&T for its phone business and its dividend. It appears that there has been elevated noneconomic selling as these shareholders exit regardless of price. On the other side, few if any investors want to buy the WBD shares prior to this forced selling being over.
This has caused the stock to decline substantially despite being already priced at a low valuation and reporting good recent results. The people selling aren’t likely considering either of those factors, which is what creates the opportunity. One wrinkle as compared to the usual spin-off special situation setup is that the non-economic selling is likely to last for some time given the retail nature of the shareholder base. This is different from the typical pattern where there is a quick sharp sell-off as institutional investors dump their shares quickly following the spin.
In anticipation of this situation, I had sold our equity prior to the major declines, and replaced it with January 2024 call options. I have since been using a portion of the cash generated from the equity sale to add to the option position as the stock price declines. While this does give up some time horizon, which I am usually loathe to do, both the technical selling and the question of the success of the merger integration are likely to be resolved well before then.
If I am correct and this is a much more valuable business than the market is giving it credit for, we will make a hefty profit. If I am wrong, and the combination of financial leverage, merger integration problems and secular risks are more serious than I foresee, we will have a moderate loss. I like our odds and the asymmetry of risk vs. reward.”
Along with Netflix, Inc., Amazon.com, Inc., and The Walt Disney Company, Warner Bros. Discovery, Inc. is a streaming stock on the radar of investors.
5. Comcast Corporation (NASDAQ:CMCSA)
Number of Hedge Fund Holders: 80
Comcast Corporation (NASDAQ:CMCSA) is up next on our list of the hottest streaming stocks to buy now. It provides cable and broadband services to millions across the United States, and also provides content streaming services through its Xfinity Stream platform, which recorded approximately 18 million subscribers at the end of 2021.
On April 29, Morgan Stanley analyst Benjamin Swinburne kept an ‘Overweight’ rating on Comcast Corporation shares and lowered the firm’s price target to $55 from $60. He sees the firm offering healthy growth in its free cash flow, EBITDA, and EPS whilst trading at deeply discounted valuations. The analyst sees Comcast Corporation as his top pick in the cable/satellite group.
Hedge funds were buying into Comcast Corporation at the close of the fourth quarter, where 80 reported bullish bets on the company shares with a collective price tag of $8.6 billion. In comparison, 75 hedge funds were long on the company shares in the preceding quarter.
For the first quarter of 2022, Comcast Corporation posted $31.01 billion in quarterly revenue, outperforming estimates by $602.5 million. EPS was recorded at $0.86, also exceeding analysts’ forecasts by $0.05.
4. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 111
The Walt Disney Company is an entertainment giant which runs Disney+, which is one of the world’s leading streaming services with roughly 138 million subscribers. This figure has registered a growth of more than 100 million since the start of 2020, highlighting how The Walt Disney Company has consistently taken market share of the global streaming industry.
On May 12, Morgan Stanley analyst Benjamin Swinburne gave The Walt Disney Company an unchanged ‘Overweight’ rating and a price target of $170, noting that the latest quarterly results highlight the firm’s growth potential, with outperformance in Parks and streaming business Disney+. The analyst sees upside potential of more than 60% for the shares.
Investors were seen piling into The Walt Disney Company stock. 111 hedge funds held positions worth $6.94 billion in the firm at the close of Q4 2021. This is in comparison to 101 hedge funds with $9.41 billion worth of stakes in the firm a quarter ago. Matrix Capital Management held a $868 million stake in The Walt Disney Company at the end of Q1 2022, making it the firm’s largest shareholder.
Investment firm ClearBridge Investments discussed the prospects of The Walt Disney Company in its Q4 2021 investor letter, stating:
“The communication services sector was a weak spot in both the benchmark and the portfolio in the fourth quarter. Disney announced lower than expected streaming subscriber growth to the company’s Disney+ offering, attributable primarily to the content release schedule. Disney has been ramping up content spending given strong global response to Disney+, although production capability was temporarily impacted by COVID-19. We still believe Disney is on track to reach the subscriber outlook outlined at its December 2020 analyst day, driven by a very robust slate of content releases, particularly in the 2022–2024 time period.”
3. Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders: 113
Netflix, Inc. is the world’s leading streaming platform. Founded in 1997, the firm currently has roughly 222 million paying subscribers, and stood as the driving force behind the world’s transition from cinema-going to streaming entertainment content at home.
For the first quarter of 2022, Netflix, Inc. reported losing subscribers for the first time in 10 years. This was a wake-up call for the company which no longer enjoys an unchallenged status in the highly competitive streaming industry.
However, Wedbush analyst Michael Pachter turned bullish on Netflix, Inc. on May 16, and upgraded the shares to ‘Outperform’ from ‘Neutral’ with a $280 price target. The analyst notes that investor confidence in the firm will restore and subscribers will start growing again as soon as it tries to reduce the churn rate by releasing new content over several weeks. The analyst believes Netflix shares present a compelling investment opportunity, and sees it only gradually raising prices and launching its ad-supported option.
Investors were bullish on Netflix, Inc. shares at the end of Q4 2021, where 113 hedge funds held stakes in the company as compared to 106 hedge funds in the previous quarter. According to its Q1 2022 portfolio, Ken Fisher’s Fisher Asset Management was the largest shareholder of Netflix, Inc., with 6.35 million shares worth $2.38 billion, showing an uptick of 18% in holding over the preceding quarter.
Here is what investment firm ClearBridge Investments had to say about Netflix, Inc. in its Q1 2022 investor letter:
“After being a prime beneficiary of increased viewing patterns during the stay-at-home period of COVID-19, Netflix is recalibrating what a normal growth trajectory will look like as global economies fully reopen. The stock fell sharply after the company modestly reduced its net subscriber additions for the current quarter, calling into question its ability to continue to deliver double-digit subscriber growth.
We believe one of our edges as active managers is our long-term orientation and willingness to be both early and patient with additions to the portfolio. With Netflix, we remain convinced that our thesis for owning the stock is intact. While some fear the U.S. streaming market is becoming saturated, Netflix’s penetration of global broadband homes is still less than 50%, a figure that doesn’t even include the opportunity to attract more mobile-only smartphone users.”
2. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 134
Apple Inc. is the Cupertino-based tech giant which revolutionized the world with its Mac computers and iPhones. In recent times, Apple has made successful forays into the streaming world with its Apple TV platform, and has reaped the benefits of producing high-quality content, with the first-ever Oscar win for a film originally produced by a streaming platform.
On April 29, Deutsche Bank analyst Sidney Ho reiterated a ‘Buy’ rating on Apple Inc. shares, and revised the price target to $200 from $210. The analyst notes that latest quarterly results show continued strength in demand for Apple’s products and services, although uncertainty in China led to increased supply-chain issues. Regardless, she views the firm as a “high-quality” name in the market, and thinks its premium valuation is justified as compared to tech hardware peers.
For the first quarter, Apple Inc. posted EPS of $1.52, outperforming estimates by $0.09. The company raked in $97.3 billion in revenue for the quarter, exceeding analysts’ forecasts by $3.3 billion. As of May 17, shares of Apple Inc. have gained 19.54% in the last 12 months.
Out of all the hedge funds tracked by Insider Monkey, 134 reported holding stakes in Apple Inc. at the end of Q4 2021, with a combined worth of $18.6 billion. This shows growing investor confidence in the firm over the previous quarter, where 120 hedge funds were long on the company shares. Apple Inc. shares comprised 42.78% of Berkshire Hathaway‘s Q1 2022 portfolio with a $155.6 billion stake, making it the largest shareholder of the firm.
Investment firm ClearBridge Investments talked about the prospects of Apple Inc. in its Q4 2021 investor letter. The fund said:
“Despite these mixed emerging growth results, the ClearBridge Global Growth Strategy outperformed the benchmark due to resilience among our secular and structural growth holdings. The bulk of these contributions came from U.S. mega-cap growth stocks Apple and Microsoft which continued to uniquely act both offensively and defensively as they have through most of the pandemic.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 279
Amazon.com, Inc. ranks first on our list of the best streaming stocks to buy. The e-commerce giant offers a wide range of entertainment content through its Amazon Prime Video platform, which has approximately 175 million subscribers from around the world.
UBS analyst Lloyd Walmsley in late April kept a ‘Buy’ rating on Amazon.com, Inc. stock, noting that it is trading at attractive valuations of 50.2x earnings and 13.6x expected EBITDA for 2023. He sees the company as a compelling option for consumers in the current high inflationary environment, given its quick delivery, price and product selection.
Of the 924 elite hedge funds tracked by Insider Monkey, Amazon.com, Inc. was the most widely-held stock with 279 bullish hedge funds bets reported at the end of the fourth quarter. This shows improving investor confidence over the previous quarter where 242 hedge funds held stakes in the company.
Here is what investment firm Miller Value Partners had to say about Amazon.com, Inc. in its Q1 2022 investor letter:
“For frame of reference, Amazon (NASDAQ:AMZN) bottomed at the same valuation in the financial crisis (side note: Amazon bottomed at 4x EV/GP after the tech bubble burst)! So there’s historical precedent for the lows being in. We will see whether that holds true this time. Regardless, we think there’s significant upside over a 5-year time horizon. The one other topic I want to briefly address is our volatility. We hope to write something about the topic in more depth in the future, but we want our clients and prospective investors to understand our views on it. We think that volatility is significantly misunderstood. We believe it creates opportunities from which we can profit.”
You can also take a look at 15 Biggest Companies That Have Been Hacked and Billionaire John Paulson’s Top 10 Stock Picks
