Disney Subscriber Base Overtakes Netflix: 5 ETFs to Stream

The Walt Disney Company DIS reported robust third-quarter 2022 results after the closing bell on Wednesday, wherein it beat estimates on both earnings and revenues. The company posted record revenues driven by record results at its theme parks division and better-than-expected new subscribers to its flagship streaming video platform Disney (read: 5 Sector ETFs to Tap for Revenue Growth Potential).

As such, shares of Disney climbed as much as 7% in after-hours trading. Investors could easily tap the strength through ETFs with the largest allocation to this global media and entertainment company. These funds — Invesco NASDAQ Internet ETF PNQI, John Hancock Multifactor Media and Communications ETF JHCS, Invesco Dynamic Media ETF PBS, iShares Global Comm Services ETF IXP and Fidelity MSCI Communication Services Index ETF FCOM — seem compelling choices to play Q3 strength.

Earnings in Detail

The company reported earnings per share of $1.09, outpacing the Zacks Consensus Estimate of 94 cents and increasing from 80 cents in the year-ago quarter. Revenues climbed 26% year over year to $21.5 billion and edged past the Zacks Consensus Estimate of $21.1 billion.

Disney added 14.4 million new subscribers during the quarter, taking total worldwide subscribers, including Disney+, Disney+ Hotstar, Hulu and ESPN+, to 221.1 million at the end of the quarter. Hulu had 46.2 million subscribers and ESPN+ had 22.8 million at the end of the quarter.

With this, Disney overtakes its streaming rival Netflix NFLX, which had 220.7 million subscribers at the end of June, as the world's biggest platform (read: 5 ETFs to Ride on the Strength in Netflix Q2 Earnings).

Disney lowered its long-term fiscal 2024 subscribers forecast by 15 million to 215-245 million from 230-260 million. The new forecast includes 135-165 million from 'core' Disney+ and 80 million from its Indian brand Disney+ Hotstar. Notably, Hotstar makes up about 36% of the total Disney+ user base. As of Jul 2, Disney+ Hotstar members totaled 58.4 million (up from the second quarter's 50.1 million).

Additionally, Disney raised the price of the ad-free Disney+ subscription to $10.99 per month, starting Dec 8 in the United States, up from the current $7.99. Plus, the company will introduce a cheaper ad-supported plan on the same day at a price of $7.99 per month. The price of Hulu's ad-free service will rise by $2 per month to $14.99, beginning Oct 10. Hulu with ads will rise by $1 to $7.99 per month.

ETFs in Focus

Invesco NASDAQ Internet ETF (PNQI)

Invesco NASDAQ Internet ETF follows the Nasdaq CTA Internet Index, which measures the performance of companies engaged in Internet-related businesses listed on the New York Stock Exchange, NYSE American, Cboe Exchange or The Nasdaq Stock Market. The product holds 82 stocks in its basket, with Netflix occupying the fourth position with 7.6% of assets.

Invesco NASDAQ Internet ETF has amassed $549.7 million in its asset base and charges 60 bps in fees per year. The fund trades in a light volume of 24,000 shares and has a Zacks ETF Rank #2 (Buy) with a High risk outlook.

John Hancock Multifactor Media and Communications ETF (JHCS)

John Hancock Multifactor Media and Communications ETF targets a wide range of U.S. media and communication stocks to exploit the sector's opportunities by tracking the John Hancock Dimensional Media and Communications Index. It holds 53 stocks in its basket, with DIS taking the fourth spot with a 5.3% share.

John Hancock Multifactor Media and Communications ETF has managed assets worth $14.9 million and charges 40 bps in annual fees. It trades in an average daily volume of about 400 shares.

Invesco Dynamic Media ETF (PBS)

Invesco Dynamic Media ETF provides exposure to companies engaged in the development, production, sale and distribution of goods or services used in the media industry by tracking the Dynamic Media Intellidex Index. It holds 31 stocks in the basket, with Netflix taking the sixth position, holding a 5% allocation.

Invesco Dynamic Media ETF has been able to manage $39.4 million in its asset base while seeing a lower volume of about 6,000 shares a day. It has 0.63% in expense ratio and a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.

iShares Global Comm Services ETF (IXP)
 
iShares Global Comm Services ETF provides global exposure to companies in media, entertainment, social media, search engine, video/gaming and telecommunication services by tracking the S&P Global 1200 Communication Services 4.5/22.5/45 Capped Index. It holds 73 stocks in its basket, with Disney taking the fifth spot at a 5% share. Interactive media & services dominates the fund’s return at 45.9%, followed by integrated telecommunication services (19%).

iShares Global Comm Services ETF has amassed $292.3 million in its asset base while trading at an average daily volume of 57,000 shares. The expense ratio comes in at 0.40%. IXP has a Zacks ETF Rank #3 with a Medium risk outlook (read: ETFs in Focus After Meta's First-Ever Revenue Drop).

Fidelity MSCI Communication Services Index ETF (FCOM)

Fidelity MSCI Communication Services Index ETF follows the MSCI USA IMI Communication Services 25/50 Index. It holds 116 stocks in its basket, with Disney occupying the fifth position at 4.9%. Interactive media & services takes the top spot at 41.3%, while entertainment, media, and diversified telecommunication services round off the next three positions.

Fidelity MSCI Communication Services Index ETF has amassed $584.3 million in its asset base and trades in an average daily volume of 81,000 shares. It charges 8 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook.

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Netflix, Inc. (NFLX) : Free Stock Analysis Report
 
The Walt Disney Company (DIS) : Free Stock Analysis Report
 
Invesco Dynamic Media ETF (PBS): ETF Research Reports
 
Invesco NASDAQ Internet ETF (PNQI): ETF Research Reports
 
Fidelity MSCI Communication Services Index ETF (FCOM): ETF Research Reports
 
iShares Global Comm Services ETF (IXP): ETF Research Reports
 
John Hancock Multifactor Media and Communications ETF (JHCS): ETF Research Reports
 
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