The past year has been great for streaming companies. Streaming has entered a new age with several businesses preparing to launch their own streaming services, including Disney+, the new HBO Max, and Paramount’s new Paramount+ (formerly CBS All Access) streaming services.
Thanks to the pandemic, video streaming has exploded. Video streaming as an industry is expected to generate more than $72 billion by the end of this year and is projected to reach over $110 billion by 2025.
One very popular streaming service is Hulu. Hulu is one of the leading streaming services in the country and has over 30 million paid subscribers.
Hulu subscribers can steam any of the millions of titles in their library, including several live streaming and award-winning original programs and movies.
If you are interested in the streaming industry, then you have probably thought about investing in Hulu before.
So we put together this comprehensive article on Hulu stock, how to invest in it, and how much it is worth.
Can You Buy Hulu Stock?
Strictly speaking, no, you cannot invest in Hulu stock. Hulu as a company is completely owned by the Disney corporation and Comcast.
As such, since the company is a subsidiary and completely owned by other companies, it is not a publicly-traded entity.
Unfortunately, this means that you cannot buy Hulu shares on the market so you cannot directly invest in the company.
However, that does not mean that you cannot indirectly invest in Hulu. You can indirectly invest in Hulu by investing through one of its parent companies Comcast (CMCSA) or Disney (DIS).
Investing in either of these two companies would give you a partial stake in Hulu, but it would not come with any exclusive voting rights or anything related to Hulu specifically.
Who Owns Hulu?
Hulu was first launched way back in 2007 through the efforts of a network of media and tech executives. The name “Hulu” was chosen and the website first launched in late 2007.
At first, the website did not have any content but invited users to leave their email for beta testing. After nearly a year of private beta testing, the company did a public launch in 2008 and started broadcasting its first streaming programs.
As time went on, more media companies started investing and featuring their content on the platform, such as Disney.
By 2010, the company managed to top $100 million in annual revenue for the first time and monthly streams reached nearly 1 billion. At the same time, the company began talks for an IPO to sell shares.
However, these plans never went through as the owners decided that no public offer was satisfactory. At this time, 21st Century Fox was the largest stakeholder and owned about 30% of the company.
In 2017, Disney announced that they were acquiring 1st Century Fox and its 30% stake in Hulu. By 2019, Comcast announced that they were relinquishing control of its equity to Disney.
As such, Hulu was now owned by Disney and Comcast, although Comcast does not handle much in running the business. According to agreements, Comcast can sell its 33% stake to Disney as early as 2024.
Acquiring Hulu was meant to be the third piece in Disney’s Direct-to-Consumer plan which includes sports streaming with ESPN+ and the then-unveiled Disney+ streaming service.
As of 2020, Disney has completely eliminated the role of CEO of Hulu, and company higher-ups report directly to DTCI and Walt Disney Television leads.
This reorganization was behind a new push to create more original content for Disney’s streaming services going forth.
So that means as of now, Hulu is more like a smaller media branch of Disney rather than its own company. Disney basically controls the entire platform, despite the fact that Comcast technically still has ownership.
Why Is Hulu Stock Valuable?
Like Netflix, Hulu is one of a handful of streaming platforms that really kicked off the streaming golden age that we are currently in. Hulu has made significant strides in the streaming industry and gains an average of 10 million users every year.
For just $12 a month, subscribers can experience thousands of hours of classic and original content. Hulu has also created some critically-acclaimed web series, including Fargo, Atlanta, Handmaid’s Tale, and the Act.
It is one of the few streaming services that can compare with Netflix in terms of quantity and quality of content.
As of the end of 2020, Hulu had 35.5 million subscribers, less than half of Netflix’s amount, but still respectable.
Netflix is still the undisputed king of streaming in terms of total revenue and subscriber base, but Hulu is a solid contender for second place.
Hulu is currently 67% owned by the Disney Corporation, which has a current market cap of over $330 billion. Disney has managed to increase profits.
Although last year the company had a record amount of revenue, the company also operated at a loss of $2 billion.
However, much of that loss was due to spending on their streaming platforms and new original content for those platforms.
Disney has also boosted Hulu subscription counts by including their streaming bundle that underlies Disney+, Hulu, and ESPN+ for $12.99 a month.
Through this subscription bundle,. Disney+ pulled in nearly 30 million subscribers in the first 3 months since it bought Hulu.
More Generally, streaming is a highly lucrative industry. The main reason why is that streaming companies have a high level of cash flow.
Every month, Hulu has a lot of liquid capital from monthly subscription costs. Also, streaming services have greatly benefited from the coronavirus pandemic the past year.
As movie theaters, bars, and restaurants have all declined in the past year, more people are streaming video while they are stuck at home.
So, since people couldn’t go out and be entertained, people brought the entertainment to themselves. So, it is expected that Disney will create a lot of revenue over the next year.
Disney in particular made the right call, launching their streaming platform just a few months before a global pandemic that forced people inside with their TVs.
The general successes of the streaming industry is one reason why so many other companies have started their own streaming platforms.
Other Streaming Companies to Invest in
Unfortunately, you cannot directly invest in Hulu. However, you can invest in Disney stock if you want to indirectly invest into Hulu.
However, if Disney does not seem like your thing, then here are some other streaming stocks that have good potential in the near future.
Comcast (NASDAQ: CMSA)
Comcast is the minority shareholder in Hulu and owns 33% of the common stock. So, if you want to invest in Hulu, you can do so through Comcast.
Even though Comcast owns a significant portion of the company, they do not really control anything with Hulu.
Comcast essentially ceded control of its shares to Disney in 2019, and it seems like Disney is going to force them to sell the remainder of their shares by 2024.
Disney has signed a deal with Comcast preventing the company from selling its shares to competitor streaming companies such as Netflix.
Comcast owns Peacock, which is NBC’s streaming service, Dreamworks, and Universal Studios, along with popular cable networks like USA, CNBC, and MSNBC.
Comcast is also the owner of At&T Broadband, Xfinity broadband, and more. The company has 21 million television subscribers, 28 million internet subscribers, and 11 million phone subscribers.
Comcast is one of the most profitable media conglomerates in the world and makes a ridiculous amount of money. Comcast reported quarterly gross profits of over 24 billion as of June 2020.
The company also has a market cap of $265 billion. Despite the massive market cap, Comcast is a good choice for value investors because of the relatively cheap share price.
Comcast is also excellent dividend stock and reported consistent dividend growth for the past 9 years.
Roku – (NASDAQ: ROKU)
Roku has had a rough past few months but don’t call it quits on the company just yet.
This streaming agency has a different orientation than the others on this list because they do not really focus on content.
Instead, Roku focuses on streaming management and has a platform where you can organize and access all your streaming content in one place. So Roku is not really in direct competition with most other streaming companies.
Roku had shown good growth through the pandemic as its account number jumped 35% since last year.
Since traditional TV viewership is falling, advertisers are looking for new ways to reach audiences and Roku is a good candidate.
Roku estimates that revenue will grow by 3% in the next quarter, a bold prediction given Roku’s historical performance. However, average revenue per customer has jumped by 32% in the past year.
Netflix – (NASDAQ: NFLX)
Netflix is the undisputed king of streaming right now and boasts over 208 million subscribers globally. The company pulled in over $25 billion in revenue last year.
However, Netflix did have a notable miss in the first quarter of 202 as they greatly missed their subscriber target count.
Many experts might say that Netflix stock is currently overvalued. Netflix claims that competition was not a major cause of these missed projections, but some analysts are skeptical of their claim.
However, even though Netflix might be losing some of its market share in recent years, it still shows strong signals to buy and hold.
Netflix cut spending last year and had a higher cash flow in 2020 and the company plans to invest $17 billion in new content for this year and the next.
It is an interesting position for the king of streaming as other competitors seem to be coming for its throne.
Netflix has made a massive shift to original programming in a bid to do away with licensing fees but is still picking up some classics in its library such as Seinfeld and its recent deal with Sony Pictures.
Fubotv Inc – (NYSE: FUBO)
FuboTV stock peaked late last year but saw a pretty big drop earlier this April.Unlike most other streaming platforms.
FuboTV focuses specifically on sports and sports streaming and has recently started branching out into sports gambling to integrate with its streaming platform.
FuboTV says its revenue nearly doubled during Q4 2020 and subscription revenues grew by 91% in the same time.
FuboTV predicts that sales should grow by 80% over the rest of 2021 and expects subscribers to grow by another 41%. FuboTV stock dropped last month due to a large net loss over the entirety of 2020.
A large part of this is due to the platform not getting as much attention as expected. Sports gambling is still in a nebulous area in many states, legally speaking, and only a handful of states have completely legalized it.
CBS Corporation Common Stock – (NASDAQ: VIAC)
ViacomCBS is the brains behind Paramount+ (formerly called CBS All Access) and also runs the free streaming service PlutoTV.
Pluto has over 24 million uses as of 2020 and Paramount+ managed to pull in over 10 million subscribers last year.
CBS All Access has also had some streaming programs that have broken records, such as Star Trek: Picard.
The company reported a gross profit of $2.79 billion in 2020 and currently has a market cap of around $25 billion.
ViacomCBS is not as large as many other streaming services but they have two major things behind them.
First, they have the entire repertoire of CBS behind them, which is one of the most popular broadcast channels in the nation.
They also have Paramount Picture’s entire library available for streaming. Viacom had to borrow money last year to stay afloat but the successful launch/rebranding of Paramount+ is a signal that the company will experience good growth through the next year.
Can You Buy Hulu Stock? Final Thoughts
So to sum up, no you cannot buy Hulu stock as the company is fully owned by Disney and Comcast. If you want to invest in Hulu indirectly, you can buy stock of one of its two parent companies.
Also, there are several streaming companies similar to Hulu to invest in.
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