Netflix has regained the title as world’s most valuable media stock, at least for now, after the streamer’s shares closed at a new record high to push its market capitalization just slightly ahead of Disney’s.
Netflix’s stock closed Friday at $351.29 per share, up 0.6%, to give it a market cap of $152.7 billion. Disney closed up 0.08%, recovering somewhat after a decline Thursday, with a market cap of $152.3 billion.
On Thursday, Netflix for a few hours had topped Disney’s market cap, before shares of Disney pared some of their losses to put the Mouse House back ahead at the close of trading.
The market-cap horse race between Netflix and Disney matters because it shows that investors believe Netflix — even though its business is much smaller today — has as much upside going forward as the 94-year-old Walt Disney Co.
Netflix’s appeal to investors is its global reach and fast-growing streaming-subscriber base, which hit 125 million at the end of the first quarter of 2018. So far, the company’s bullish fans are comfortable with Netflix’s heavy content spending and cash burn, pinning their hopes on the prospect of future returns.
Netflix remains much smaller than Disney in terms of its financials, and operates at a lower net margin. For 2017, Netflix generated revenue of $11.7 billion and reported net income of $559 million. Disney posted sales of $55.1 billion and net income of $8.9 billion for its most recent fiscal year, which ended Sept. 30, 2017.
The Netflix-vs.-Disney “whose market cap is bigger” storyline also is intriguing given the history between the two companies. Disney is ending its TV-window movie output deal with Netflix effective with 2019 theatrical releases — and instead, Disney will copy Netflix’s model with a planned Disney-branded subscription service next year.
Meanwhile, there was speculation before Disney’s direct-to-consumer move (which included acquiring majority control of streaming-infrastructure company BAMTech) that the conglomerate might make an M&A play for Netflix.
Netflix rose past Comcast’s market cap earlier this week. Last year, Netflix surpassed the market capitalization of Time Warner — target of AT&T’s still-pending takeover. Wags recalled Time Warner CEO Jeff Bewkes’ dis of Netflix in a 2010 interview, when he said about the company, “It’s a little bit like, is the Albanian army going to take over the world? I don’t think so.”
Reed Hastings, CEO and chairman of Netflix, has seen his personal net worth rise dramatically with the company’s stock run-up. The exec’s net worth currently estimated to be about $3.7 billion, per Forbes.