Because subscription cancellation rates are rising, due primarily to increased interest in outdoor activities by growing numbers of vaccinated consumers and content inadequacies, streaming giants Netflix (NASDAQ:NFLX) and Disney (DIS) could face hurdles in their growth path. And intense competition in the streaming space could make matters worse for the two stocks. So, let’s evaluate if either of these two stocks is a buy now.Netflix, Inc. (NFLX) and The Walt Disney Company (NYSE:DIS) are dominant players in the streaming space. Evolving from a DVD rental business to a streaming giant, NFLX has transformed its business and diversified its service offerings to capitalize on the home entertainment trend. In comparison, media and entertainment conglomerate DIS’ launch of its streaming service Disney+ represents a strategic pivot for the company.
As the COVID-19 pandemic accelerated the growth of the home-entertainment market, streaming stocks saw spectacular gains last year. However, because more people are embracing outdoor activities again amid a speedy vaccination drive, there has been a significant decline in the subscription growth rates of streaming companies lately. In short, now that the pandemic has eased somewhat, consumers are choosing to discontinue their video-streaming subscriptions. This could negatively impact NFLX’s and DIS’ businesses. In fact, given the competitive streaming landscape, a decline in customer loyalty and content production delays could cloud their near-term prospects.
Over the past month, NFLX has lost 8.3%, while DIS has declined 3.7%. In terms of past year performance, NFLX has gained 16.8%, while DIS returned 79.6%. Let’s find out if any of these stocks is a good pick now.