Netflix Inc (NASDAQ: NFLX) maintains a significant first-mover advantage in streaming with more than 280 million subscribers worldwide.
Its diverse content strategy, spanning multiple languages and genres, and aggressive investments in original programming continues to drive international expansion.
Still, Steve Weiss of Short Hills Capital Partners is convinced there’s enough room in streaming for the Walt Disney Co (NYSE: DIS) to grow alongside NFLX in 2025.
Streaming market will continue to grow at a rapid pace
Growth estimates also suggest substantial room for expansion in the global streaming space.
The streaming market is expected to grow at a compound annualized rate of nearly 18% to hit $2.5 trillion valuation by the end of 2032.
Plus, current penetration rate indicates ample room for growth as well.
There are about 1.8 billion subscriptions to streaming services at writing versus an estimates 5.5 billion people with access to broadband.
So, Disney could particularly tap on the underpenetrated markets like Asia and Africa to drive future growth – while in the more developed economies, it stands to benefit from increasing consumer willingness to subscribe to multiple streaming services as well.
Note that Disney’s streaming business has already turned a profit that further corroborates the “sufficient room” narrative.
In Q4, that segment generated $321 million in operating income against expectations of $387 million “loss”.
The fourth-quarter release contributed to unlocking significant upside in Disney that’s now up a whopping 35% versus its year-to-date low in August.
Disney stock could hit $140 in 2025
Disney could grow alongside Netflix in streaming also because it has a somewhat different content strategy than its rival.
While Netflix focuses on broad-appeal original content and licensed programming, Disney taps on family entertainment and powerhouse franchises like Marvel, Star Wars, and Pixar.
This key differentiation will likely remain central in enabling Disney to continue to attract a slightly different audience than Netflix in its pursuit of profitable growth.
Additionally, the company’s bundling strategy with Hulu and ESPN+ provides additional value proposition for consumers that helped it majorly in accumulating more than 150 million global subscribers over the past four years.
And analysts at the Bank of America Securities are convinced the number will continue to go up in the years ahead.
The investment firm reiterated its “buy” rating on Disney stock last week and raised its price target on $140 that indicates potential for about a 13% upside from here.
BofA cited the company’s guidance for its bullish view in its recent note.
Disney expects just under 10% year-on-year increase in its per-share earnings in FY25 – and the management is confident in its ability to push the growth rate well into double digits for the next two years each.
Disney shares currently pay a dividend yield of 0.64% that makes them all the more attractive for those looking for a source of passive income.
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