PARA

Paramount Global

19.13
USD
-2.25%
19.13
USD
-2.25%
18.80 41.08
52 weeks
52 weeks

Mkt Cap 11.63B

Shares Out 607.88M

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3 Streaming Stocks That Are Challenging Netflix

With 220 million paying subscribers, Netflix (NASDAQ: NFLX) is still the streamer to beat, but after reporting two consecutive quarters of subscriber losses, its stock price has significantly underperformed the competition. If you're interested in buying streaming stocks but want to learn about alternatives to Netflix, you're in the right place. Three Motley Fool contributors explain why Warner Bros. Discovery (NASDAQ: WBD), Paramount Global (NASDAQ: PARA) (NASDAQ: PARA.A), and Walt Disney (NYSE: DIS) could be in a great position to benefit from the streaming battle unfolding right now. This newly merged company has a massive content library Jennifer Saibil (Warner Bros. Discovery): The streaming wars have intensified, and this spinoff from AT&T is well positioned to capture market share and grow its business. So far, it's not off to a great start. It was born with a load of debt after the April spinoff that merged Warner Bros. and Discovery, and as inflation has hit Americans' pockets, it posted a slight year-over-year revenue decrease in the second quarter. The net loss was $3.4 million. It will continue to absorb restructuring costs in the near future as it manages the financials of a large merger. But there are many reasons to believe it has a bright future, most obviously in the form of its huge media library. Warner Bros. Discovery operates a wide range of media networks, most of which have been up and running for decades. Some examples are HBO, CNN, and the Discovery Channel, which are all still important assets. It also owns Warner Bros. Studios, which produces franchises including the Harry Potter films and the DC Comics brand. The vast content library already gives the company an edge when competing against Netflix or any other streaming company, and brings it straight into streaming's major leagues. Streaming accounts for only a fairly small portion of the total business. Direct-to-consumer revenue was $2.2 billion in the 2022 second quarter, or slightly less than a quarter of the company's total revenue of $9.8 billion. That's a benefit, since Warner Bros. Discovery has other resources and revenue generators instead of putting all of its eggs in one basket. But with 92 million customers for all of its streaming services, it offers strong competition for Netflix, even if it won't take the mantle of top streaming company in the near future. And while the company's total revenue decreased, streaming revenue increased 4% year over year. Warner Bros. Discovery shareholders might be in for a wild ride as the company charts a path forward, but the potential is there. And with shares trading at a cheap price/earnings-to-growth ratio of 1.21, and dirt cheap price-to-sales ratio of only 0.77, this stock has a lot to offer investors. The complete entertainment package John Ballard (Paramount Global): Netflix has attributed its recent losses in subscribers to account sharing, macroeconomic factors, and competition. TV networks were slow to migrate over to digital platforms, which gave Netflix a free pass to win subscribers. That has all changed over the last few years. Paramount Global (formerly ViacomCBS) has posted impressive growth this year. The company rebranded its CBS All Access streaming service as Paramount+, and it's been growing rapidly. Global streaming subscribers, including Pluto TV, nearly doubled to 56 million in 2021 and has continued that streak through the first half of 2022. The combination of news, live sports, and entertainment in one package appears to be a winning ticket in the streaming market right now. Paramount+ added another 4.9 million subscribers in the second quarter. It is clearly taking share away from Netflix, which has reported two consecutive quarters of subscriber losses. More choice is clearly playing a factor in limiting Netflix's growth right now. It's not over for the company, however. Netflix still has the most subscribers, if you exclude Disney's Hulu and ESPN+ subscribers. But it's going to need to make some adjustments to keep up with competing media companies, and that's easier said than done. Paramount is executing a successful strategy of leveraging entertainment properties across theatrical releases, TV media, and streaming to grow its audience. The stock trades at a forward price-to-earnings (P/E) ratio of 10.6, providing investors more value than Netflix's forward P/E of 23.7. Investors are getting a lot more growth for less than half the price. Disney is more than challenging Netflix Parkev Tatevosian (Disney): While Netflix undeniably deserves credit for pioneering the streaming-content industry, The Walt Disney Company is quickly catching up. The House of Mouse exploded on the scene in November 2019 when it launched its flagship service, Disney+. That's one of its three streaming services, with the others being Hulu and ESPN+. Altogether, Disney's bundle of three services had 221 million streaming subscribers as of July 2, which slightly eclipsed Netflix's 220 million and change. Management updated its subscriber target, aiming for 230 million at the midpoint by 2024. Unlike Netflix, which started from scratch, Disney had a robust library of content it could shift to its streaming platforms. It is home to popular properties like Star Wars, Marvel, Pixar, Mickey Mouse and friends, and more. A film or series based on any of the aforementioned group is more likely to attract viewers because of their history. In its most recent quarter, which ended on July 2, Disney's streaming segment generated $5 billion in revenue, a 19% increase from the prior year. That's a faster growth rate than Netflix, which expanded revenue by 8.6% in its most recent quarter. Still, Netflix earned an operating income of $1.6 billion, while Disney lost $1 billion in its streaming segment. Netflix remains the undisputed leader in the streaming industry when measured by the crucial metrics of revenue and subscribers. But as highlighted above, Disney's three services surpassed the pioneer in overall subscribers. Investors who want to capitalize on this secular trend could do well by adding Disney's stock to their portfolios. 10 stocks we like better than Warner Bros. Discovery, Inc. When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* They just revealed what they believe are the ten best stocks for investors to buy right now... and Warner Bros. Discovery, Inc. wasn't one of them! That's right -- they think these 10 stocks are even better buys. *Stock Advisor returns as of July 27, 2022 Jennifer Saibil has positions in Walt Disney. John Ballard has positions in Netflix. Parkev Tatevosian has positions in Walt Disney and has the following options: long January 2024 $105 calls on Walt Disney. The Motley Fool has positions in and recommends Netflix and Walt Disney. The Motley Fool recommends Warner Bros. Discovery, Inc. and recommends the following options: long January 2024 $145 calls on Walt Disney and short January 2024 $155 calls on Walt Disney. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Today’s Big Picture Asia-Pacific equity indexes ended today’s session down across the board. India’s Sensex ended the day essentially flat, down 0.06%, China’s Shanghai Composite and Australia’s ASX All Ordinaries declined 0.54% and 0.55%, respectively while Japan’s Nikkei fell 0.65%, Taiwan’s TAIEX dropped 0.74% and South Korea’s KOSPI declined 0.90%. Hong Kong’s Hang Seng led the way, down 1.96% on a broad selloff led by Health Technology and Health Services names while Transportation and Communications sectors provided the only relief. By mid-day trading, major European equity indices are down across the board and U.S. futures point to a positive open later this morning. At 8:30 AM ET, the much anticipated July Consumer Price Index (CPI) report was released: The headline figure for the month was expected to fall to 8.7% from June’s blistering 9.1% reading with core CPI that excludes food and energy ticking higher to 6.1% in July vs. 6.0% the prior month. The actual numbers show that inflation hit 8.5%, and core inflation was 5.9%. With the national average retail price for a gallon of gas falling through late June and July from its June 14 high of $5.016 per gallon per data from AAA, forecasters had expected the month over month decline in the headline CPI for July. The July Employment Report also showed wage inflation ran hotter than expected during the month. Let’s also keep in mind that we will be facing a “wash, rinse, repeat” cycle when it comes to inflation data and expectations for the Fed given tomorrow’s July Producer Price Index report. Data Download International Economy Producer prices in Japan rose by 8.6% YoY in July, compared with market forecasts of 8.4% and following an upwardly revised 9.4% the prior month. While marking the 17th straight month of producer inflation, the latest reading was the softest since last December. China's annual inflation rate rose to 2.7% in July from 2.5% in June and compared with market forecasts of 2.9% but even so the July figure marked the highest reading in the last year. The country’s Producer Price Inflation figure for July eased to a 17-month low of 4.2% YoY from 6.1% the prior month and less than the market consensus of 4.8%. Annual inflation rate in Germany was confirmed at 7.5% YoY for the month of July, down slightly from June’s 7.6% reading but still above the March and April figures of 7.3%-7.4%. The annual inflation rate in Italy slowed to 7.9% YoY in July from June’s 8% reading matching expectations for the month. While energy prices declined, prices for food and transportation rose at a faster pace. Domestic Economy This morning we have the usual Wednesday weekly reports for MBA Mortgage Applications and Crude Oil Inventories from the U.S. Energy Information Administration. At 10 AM ET, Wholesale Inventories for June will be published, and the figure is expected to rise 1.9%. While investors and economists will keep more than a passing interest in those reports and data, as we discussed above, it will be the July Consumer Price Index report at 8:30 AM ET that will shape not only how the US stock market opens today, but also expectations for the Fed’s next course of monetary policy action. The U.S. Energy Information Administration (EIA) expects domestic production of crude oil, natural gas and coal will all increase next year compared with this year. It forecast US crude production rising 6.7% to an all-time annual high 12.7M bbl/day in 2023 from 11.9M bbl/day in 2022, US natural gas output climbing to 100B cubic feet (cf)/day from 97B cf/day, and US coal production inching up to 601M short tons in 2023 from an expected 599M this year. The EIA also modestly increased its 2022 average nationwide gasoline price forecast to $4.07/GALLON vs. $4.05 if called for last month. It now also sees 2023 prices at $3.59/GAL vs. its previous forecast of $3.57. Markets Stocks continued in their holding pattern waiting for the latest CPI print save for some fundamental stories pushing Technology names and small caps around. The Dow and the S&P 500 were down slightly at 0.18% and 0.42%, respectively while the Nasdaq Composite dropped 1.19% and the Russell 2000 closed down 1.46% on the day. Energy names led the way yesterday but were overpowered by Technology and Consumer Discretionary sectors. Here’s how the major market indicators stack up year-to-date: Dow Jones Industrial Average: -9.81% S&P 500: -13.51% Nasdaq Composite: -20.14% Russell 2000: -15.83% Bitcoin (BTC-USD): -52.08% Ether (ETH-USD): -55.38% Stocks to Watch Before trading kicks off, CyberArk (CYBR), Fox Corp. (FOXA), Jack in the Box (JACK), Nomad Foods (NOMD), Vita Coco (COCO), Tufin Software (TUFN), and Wendy’s (WEN) will be among the companies issuing their latest quarterly results and guidance. At 9 AM ET, Samsung (SSNLF) will hold its Galaxy Unpacked 2022 at which it is expected to introduce new Galaxy foldable smartphone models, a new Galaxy Watch, and Galaxy Buds. Shares of advertising technology platform company The Trade Desk (TTD) jumped after the company reported quarterly results that topped expectations and guided current quarter revenue above the consensus forecast. The RealReal (REAL) reported a smaller than expected bottom line loss for its June quarter as revenue for the period rose 47.2% YoY to %154.44 million, topping the $153.99 million consensus. However, the company issued downside guidance for both the current quarter and 2022. Revenue for the September quarter is now expected to be $145-$155 million vs. the $164.3 million consensus; for the full year of 2022, revenue is forecasted to be $615-$635 million vs. the $653.7 million consensus. Shares of Coinbase Global (COIN) moved lower after it reported June quarter results that missed top and bottom line expectations. Revenue for the quarter fell 63.7% YoY as Total trading volume fell 53.0% YoY and 29.8% sequentially to $217 billion. Monthly Transacting Users (MTUs) grew 2.3% YoY but fell 2.2% sequentially to 9.0 million. For the current quarter, Coinbase sees the number of MTUs trending lower sequentially and total trading volume to be lower compared to the June quarter. Shares of Sweetgreen (SG) tumbled in aftermarket trading last night after the company missed quarterly revenue expectations, lowered its 2022 forecast, announced it will lay off 5% of its workforce, and downsize to smaller offices. ChipMOS TECHNOLOGIES (IMOS) reported its July revenue was $65.1 million, a decrease of 19.4% YoY and down 7.7% MoM. Taiwan Semiconductor (TSM) reported its July revenue increased 49.9% YoY to NT$186.76 billion, which equates to a 6.2% MoM improvement. Electric vehicle subscription startup Autonomy placed a $1.2 billion order for 23K electric vehicles with 17 global automakers, including BMW (BMWYY), Canoo (GOEV), Fisker (FSR), Ford (F), General Motors (GM), Hyundai (HYMTF), Lucid Group (LCID), Mercedes-Benz (DDAIF), Polestar (PSNY), Rivian (RIVN), Stellantis (STLA), Subaru (FUJHY), Tesla (TSLA), Toyota Motor (TM), VinFast, Volvo Car (VLVOF) and Volkswagen (VLKAF). IPOs As of now, no IPOs are slated to be priced this week. Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page. After Today’s Market Close Bumble (BMBL), CACI International (CACI), Coherent (COHR), Dutch Bros. (BROS), Red Robin Gourmet (RRGB), and Walt Disney (DIS) are expected to report their quarterly results after equities stop trading today. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar. On the Horizon Thursday, August 11 Germany: Thomson Reuters Ipsos Monthly Global Primary Consumer Sentiment Index - August US: Weekly Initial & Continuing Jobless Claims US: Producer Price Index – July US: Weekly EIA Natural Gas Inventories Friday, August 12 Japan: Thomson Reuters Ipsos Monthly Global Primary Consumer Sentiment Index - August China: China Thomson Reuters Ipsos Monthly Global Primary Consumer Sentiment Index - August Eurozone: Industrial Production - June US: Import/Export Prices – July US: University of Michigan Consumer Sentiment Index (Preliminary) – August Thought for the Day “The release date is just one day, but the record is forever.” ~ Bruce Springsteen Disclosures Tufin Software (TUFN), CyberArk (CYBR) are constituents of the Foxberry Tematica Research Cybersecurity & Data Privacy Index Canoo (GOEV), Fisker (FSR), Lucid Group (LCID), Rivian (RIVN), Tesla (TSLA), Vita Coco (COCO) are constituents of the Tematica BITA Cleaner Living Index Canoo (GOEV), Fisker (FSR), Lucid Group (LCID), Rivian (RIVN), Tesla (TSLA), Vita Coco (COCO) are constituents of the Tematica BITA Cleaner Living Sustainability Screened Index The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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