Walt Disney Co. shares have tumbled amid the coronavirus pandemic, and the sell-off has resulted in a smaller valuation than video-streaming company Netflix Inc., a reflection of what segments of the media ecosystem are favored in an uncertain environment.
Thus far this year, Disney shares have dropped more than 40%, compared with a gain of 9.2% in Netflix. Based on their most recent close, these moves have given Netflix a market capitalization of about $158 billion, compared with Disney’s $154.8 billion valuation.
This is not the first time the video-streaming giant has eclipsed the Mouse House in size. The last time was in March 2019, when the achievement was short lived. Prior to that, Netflix sustained a larger valuation for a few weeks in mid-2018.
Netflix is “a key beneficiary” of the change in behavior the pandemic has prompted, as Baird wrote in a recent upgrade, with the outbreak causing more people to stay at home and stream more video.
According to Credit Suisse, Netflix has seen a spike in downloads for its app in regions that have been hit hard by the coronavirus, a trend that could point to higher international demand.
In the U.S., the Centers for Disease Control and Prevention has encouraged most people to stay at home, while states including New York and California have issued social-distancing mandates.
While Disney recently launched a streaming service of its own, the company’s more diverse business model has opened it up to multiple risks.
Bloomberg Intelligence analyst Geetha Ranganathan wrote that the outbreak was “hammering multiple segments” of the company, “with theme parks closed, film releases delayed, sporting events canceled on its TV networks — most notably ESPN — and film and TV production halted.”
The company’s outlook over the near and medium-term, analyst Geetha Ranganathan wrote, is “under severe pressure.”
According to data compiled by Bloomberg, expectations for Disney’s full-year adjusted earnings have dropped by 12.5% over the past month, while revenue expectations are down 1.2%.