The streaming wars are heating up as consumers hunker down.
Disney has proven a formidable threat in the last week after reporting it hit the 50 million subscriber milestone. With Netflix, Amazon and Apple attracting their own viewers, Mark Tepper, president of Strategic Wealth Partners, said this is not a zero-sum game – but in the short term, there is one winner and one loser.
"We sold Disney [Wednesday] because we think we're going to buy it back lower. So, I know 50 million subs puts them way ahead of schedule, they were expecting 60 to 90 million by 2024. But let's face it, this is less than 10% of their business and it doesn't make them any money. And they've got some serious headwinds," Tepper told CNBC's "Trading Nation" on Thursday.
Disney's parks and consumer experiences segment makes up nearly 40% of revenue, according to FactSet. Those parks, including its major locations in Anaheim, California, and Orlando, Florida, have been shuttered until further notice.
"We like Netflix here, it's the pure play on streaming. People are stuck at home and they're binge-watching everything," said Tepper. "With Netflix it's all about their original content. They're not pumping out a bunch of reruns and old movies and stuff like that. They're consistently rolling out new, fresh, engaging, high-quality content."
Netflix added 8.8 million subscribers in its fourth quarter, higher than the 7.6 million forecast. The company is set to report first-quarter earnings on April 21.
Matt Maley, chief equity strategist at Miller Tabak, said Disney could have further to fall given headwinds from its parks and other businesses affected by the coronavirus lockdowns. However, he said Apple, Netflix and Amazon's charts have a solid technical setup.
"All these charts look pretty good. You look at Netflix … it already broke out of a symmetrical triangle pattern, and now it's getting close to its all-time high, up at $387. If it can break above that level, that's going to be kind of a double boost to the stock, and really get it going," Maley said during the same segment.
Maley added that Amazon has just broken out of an ascending triangle pattern which should put some momentum behind its upside moves. Apple, too, has gone above its 200-day moving average and made a higher low and higher high, which he said gives it energy to move upward.
"If they break out further, they'll get some momentum and momentum can be a real good play right now, especially in a name like Amazon," said Maley.
Disclosure: Strategic Wealth Partners holds Netflix.
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Source: cnbc.com