Netflix vs. Disney: Which Streaming Stock is better?

In the world of streaming entertainment, two major players stand out: Netflix and Disney. Netflix, the pioneer in the streaming industry, has a huge global fan base, churns out impressive original content, and is known for its innovative approach. On the other hand, Disney+, although a newer player, leverages Disney’s vast content library and beloved franchises like Marvel, Star Wars, and Pixar. So, the big question on investors’ minds is: which of these streaming giants is the better stock pick?

Let’s take a closer look at the facts to see which company offers a stronger investment opportunity right now.

Netflix has firmly established itself as the leader in the streaming market, with significant growth in the fourth quarter of 2024. The company added a record-breaking 18.91 million paid subscribers during that quarter, bringing its total subscriber count to 301.63 million. Not only is Netflix growing its subscriber base, but its financials are also looking strong. In 2024, the company saw a 16% increase in revenue and a whopping 52% surge in operating income. With free cash flow of around $7 billion, Netflix is in a solid financial position to invest in content and reward its shareholders.

In terms of content, Netflix continues to deliver hits across different genres. From the success of Squid Game Season 2 to venturing into live events like the Jake Paul vs. Mike Tyson fight, Netflix is keeping audiences engaged. With popular series like Wednesday and Stranger Things returning in 2025, Netflix is set up for more success in the future.

However, Netflix does face some challenges. While its advertising revenue is expected to double in 2025 and operating margins are improving, there are concerns about the level of growth already priced into the stock. Currency fluctuations, increased competition, and uncertainty around subscriber retention post-price hikes suggest that a more favorable entry point might be on the horizon. Despite these challenges, Netflix is forecasting significant revenue growth for 2025, with the Zacks Consensus Estimate pegged at $44.42 billion.

On the other side, Disney offers investors a diversified entertainment powerhouse. With assets ranging from streaming services like Disney+ and Hulu to theatrical releases, theme parks, and merchandising, Disney has a multi-faceted revenue stream. In 2024, Disney’s theatrical business exceeded $5 billion in worldwide box office sales, driven by hits like Inside Out 2 and Moana 2. This success not only boosts Disney’s overall revenue but also provides fresh content for Disney+.

Disney’s streaming strategy is evolving with the addition of an ESPN tile on Disney+, giving subscribers access to ESPN+ sports content. This, along with new features like the 24/7 Simpsons channel, enhances the platform’s appeal. Disney’s theme park business also shows promise, with plans for expansions and celebrations, providing additional revenue streams that streaming-only companies don’t have.

When looking at valuations, Disney appears more attractive with a forward P/S ratio of 1.57X compared to Amazon’s 8.68X. This suggests that Disney offers better value for investors interested in the streaming industry. In terms of stock performance, Netflix has seen significant growth over the past year, outperforming Disney and the broader market. However, Disney’s potential for multiple expansion suggests room for growth in the future.

In conclusion, both Netflix and Disney have their strengths and weaknesses as investment opportunities. Investors should consider factors like financial performance, content strategy, and market positioning when making a decision. While Netflix is the current market leader, Disney’s diverse revenue streams and potential for growth make it a compelling option for long-term investors.