The pandemic distorted the growth rates of streaming firms. During the worst phase of the lockdown, investors flocked to Roku (ROKU). They valued the streaming platform based on continued subscriber growth.
Roku dominates the set-top market. TV suppliers include Roku on the Smart TV. Still, the stock is correcting due to near-term concerns. In the third quarter, Roku blamed supply-chain issues hurting its player production. Account growth slowed, suggesting the easing lockdown will hurt it further.
ROKU stock may fall further if investors think the slowdown is permanent. Users are shifting from cable TV to streaming. Roku is in the strongest position to capitalize on the permanent migration to streaming platforms.
Disney (DIS) rewarded investors who bet that the Disney+ streaming service would grow. Yet the easing lockdown hurt Disney in two ways. First, streaming sign-ups are slowing. The channel offers unique hits like The Mandalorian. Without more hits, viewers have little reason to continue their Disney subscription. Second, Disney’s movies are competing with theatrical releases. People who pay to watch on the streaming service will not watch the movie in theatres.
After closing temporarily during the pandemic, Disney’s theme park will emerge as a winner. Investors are ignoring this catalyst that may lift DIS stock from here.
