Netflix (NASDAQ:) is significantly expanding its customer base. Which service can meet that demand?
On Tuesday, Netflix reported fourth-quarter earnings. The streaming giant added 13.12 million subscriptions in 2023, beating expectations of 9 million.
Netflix's revenue of $8.83 billion exceeded Wall Street's expectations of $8.71 billion, representing 12.5% year-over-year growth. For the next quarter, the company expects sales of $9.24 billion, compared to a similar Wall Street consensus of $9.28 billion.
NFLX is up 18.7% year-to-date, with a significant increase after its most recent quarterly report. Given this impressive subscriber growth, which stocks are likely to benefit from streaming uptake?
1. Comcast
The global telecommunications company powers much of the online infrastructure and has a 70% market share over its competitors as of Q3 2023. Comcast (NASDAQ:) reported a 19.1% increase in free cash flow for the third quarter of 2023 compared to the same period last year. broadband, video, audio, wireless, theme parks.
The company has a long-standing partnership with Netflix. In 2016, Comcast brought Netflix to its proprietary X1 platform, which serves as an operational hub that integrates television and internet services. In 2018, Comcast further enhanced Netflix by adding the ability to add a Netflix subscription to your Xfinity package.
Although CMCSA isn't a high-growth stock like NFLX, Comcast has a solid dividend history, increasing its dividend every year since 2008. CMCSA currently has a dividend yield of 2.64% with an annual dividend of $1.16 per share.
CMCSA is a Strong Buy based on the opinions of 27 analysts sampled by . CMCSA's average price target is $50.19, compared to the current price of $44. The high estimate is $58 per share, and the low estimate is $43 per share, close to the current range.
2. Digital Ocean
This cloud computing platform is aimed at small and medium-sized businesses, including startups. DigitalOcean (NYSE:)'s competitive pricing makes it an attractive choice for data storage, virtual machines, and managed Kubernetes services (DOKS).
In fact, you can use DigitalOcean services to provide a smart DNS proxy solution that removes Netflix from geo-restrictions. In its latest third-quarter earnings report, DigitalOcean's revenue increased 16% year-over-year to $177 million, with free cash flow of $127 million.
When converting revenue to revenue, the company has a net profit margin of 11%, which is higher than large companies like AWS. Over the past three months, DOCN stock has outperformed his NFLX, rising 57% and 36%, respectively.
DOCN stock is a “buy” based on the opinions of 12 analysts compiled by Nasdaq. DOCN's average target price is $35.44, compared to the current price of $34. The highest prediction is $47 and the lowest prediction is $25.
3. Roku
Roku (NASDAQ:) was founded in 2008 as a spinoff of Netflix devices and has become a top media player in hosting Netflix and distributing its content. In Q3 2023 revenue, Roku reported his 75.8 million active users, nearly doubling from 2020.
Roku devices accounted for 26.7 billion hours of viewing time worldwide in Q3. On average, this translates to 3.9 streaming hours per account, representing a 5% year-over-year increase.
Roku's revenue for the quarter rose 20% year-over-year to $912 million, and its gross margin, excluding restructuring costs, rose 22% year-over-year. For the fourth quarter, he expects gross profit to increase to $405 million and sales to $955 million.
Over the past three months, ROKU stock has outperformed NFLX by 47% vs. 36%, respectively. ROKU stock is a “buy” based on the opinions of 26 analysts compiled by Nasdaq. ROKU's average target price is $89.67 and current price is $90.97. The highest forecast is $120 and the lowest forecast is $65 per share.
Disclaimer: The author does not own or hold any securities discussed in the article.
Neither author Tim Freese nor this website, The Tokenist, provides financial advice. Please review our website policies before making any financial decisions.
This article was originally published on The Tokenist. Check out Five Minute Finance, The Tokenist's free newsletter, which provides weekly analysis of the biggest trends in finance and technology.
