This is one of those times when It’s more important to watch what consumers do more than what they say. Despite frustration over “streaming fatigue,” consumers continue to pay for multiple streaming services. A study by Deloitte Insights shows that American households subscribe to an average of four streaming services. That’s why streaming stocks are among the best investments for 2024.
The streaming model simply fits the way consumers want to watch TV. That is, with or without ads, they want to watch the content they want, when they want, and for as long as they want. Streaming services provide original and/or syndicated content that allows consumers to do just that.
The streaming industry is expected to be valued at $330 billion by 2030. That’s up from $60 billion in 2021. Here are three streaming stocks to consider for 2024.
Netflix (NFLX)
Netflix (NASDAQ:NFLX) continues to find ways to reinvent itself. Heading into 2023, the pure-play streaming giant faced at least two significant challenges. The first was to show that it could convince consumers to pay for a less-expensive, ad-supported tier. The second was to crackdown on password sharing without losing subscribers.
The moves made sense for Netflix, but they also went against the original brand ethos. This was a company that was built on the ideas of no ads and sharing was caring.
However, as mentioned in the intro, this is another example of following what consumers do more than what they say. In this case, consumers are saying loud and clear that they’ll take ads for a lower monthly price. That lower monthly price is also making it easier for consumers to foot their own bill rather than sharing a password.
In the last two quarters, Netflix has posted year-over-year increases in earnings per share. Earnings are supposed to increase by 31.9% in 2024. Some investors may be concerned that the earnings are already part of the NFLX stock price. However, analysts are growing bullish on Netflix and that makes it one of the streaming stocks to buy in 2024.
Apple (AAPL)
Apple (NASDAQ:AAPL) makes this list of streaming stocks to buy because of the company’s large pile of cash. It’s no secret that Apple generates about 25% of its revenue from the Services side of its business. One of those services is AppleTV+.
AppleTV+ already has an impressive stable of original content including Ted Lasso and Severance. However, Apple has been making significant moves into live sports. This is becoming a critical, and lucrative, side of streaming.
The company already has partnerships that allow it to stream exclusive games for Major League Baseball, the National Basketball Association, and Major League Soccer. It also narrowly missed being the winner of the lucrative NFL Sunday Ticket package that ultimately went to Alphabet (NASDAQ:GOOGL) and its YouTube TV network.
As we head into 2024, at least one analyst, Dan Ives of Wedbush, believes that ESPN is a “perfect fit” for Apple. That would be a big acquisition for Apple, but one that the company can easily afford.
Roku (ROKU)
Roku (NASDAQ:ROKU) is widely known as a pick-and-shovel play on streaming stocks. The company’s hardware (e.g. Roku sticks and Roku TVs) serve as a critical gateway that allows viewers to aggregate their content and move easily between streaming services.
However, Roku also makes a considerable amount of revenue from selling digital advertising. That’s where the story seems to be in 2024.
Luke Lango pointed out to investors that Roku makes most its revenue via selling ads. That’s one reason the stock is trading about 55% below its five-year average forward revenue multiple despite being up over 120% in 2023.
That growth may be a reason that short interest in ROKU stock is up in the last month, particularly as the company continues to post negative earnings as it struggles to control costs. A boost in digital ad revenue would be a big step in the direction of renewed profitability.
On the date of publication, Chris Markoch had a LONG position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
