8 Best Media Stocks to Buy
The word “media” is defined as “the main means of mass communication (broadcasting, publishing and the internet) regarded collectively.” Since the way that people communicate and consume information is always shifting, this means that what can be defined as a media stock is constantly shifting as well.
With that being said, I’ve come up with a list of eight media stocks and social media stocks that may be worth adding to your portfolio.
Let’s take a quick look at the best media stocks to buy…
Best Media Stocks to Buy
NOTE: I’m not a financial advisor and am just offering my own research and commentary. Please do your own due diligence before making any investment decisions.
Netflix (Nasdaq: NFLX)
When talking about stocks that completely redefined an industry, Netflix is usually one of the most common companies to reference. In 2007, Netflix essentially put Blockbuster out of business by announcing that its users will be able to stream content directly from their TV, laptop or cell phone. Since 2007, its stock has exploded from $3 per share to over $600 per share. This is an increase of over 18,000%.
Based on its own success, it correctly predicted that other companies may try to copy them and would pull its content from Netflix’s site. To combat this, Netflix has created originals like The Queen’s Gambit, Stranger Things and The Witcher which have helped the company stay relevant once fan favorites like The Office got yanked for other streaming platforms.
It’s true that Netflix faces much more competition today than it did over the past decade. The Streaming Wars are in full swing and a few companies that compete with Netflix today are:
- HBO Max
- Prime Video
- AppleTV Plus
However, this has not necessarily slowed down Netflix’s business. Netflix has reported growing revenues of 29.6% on average over the past five years. In 2020, it posted total revenue of $25 billion and a net income of $2.76 billion. It currently has about 209 million Netflix subscribers (about ⅔ of the United States population).
Despite steep competition, Netflix will likely continue to enjoy an “early mover” advantage. By this, I mean that most people have already had a Netflix subscription for years. Since no streaming service is going to have everything viewers want, most people will probably just keep their Netflix subscription and add other platforms.
Netflix stock was up about 60% in 2020 and is up roughly 500% over the past five years.
AMC (NYSE: AMC)
The next stock on this list of media stocks to buy is AMC. It’s the parent company of AMC, IFC and WeTV. These days, you probably recognize AMC as one of the most talked-about tickers on the Reddit group WallStreetBets. This also classifies AMC as a so-called “meme stock.” Depending on the type of investor you are, this either makes you want to buy as many shares as possible or run as far away as you can.
It’s true that AMC was involved in a targeted short squeeze earlier in the year. The price shot up 2,600% in a matter of weeks. It’s also true that COVID-19 crippled AMC’s business while pouring rocket fuel on Netflix. If you’re AMC, it’s impossible to make any money when it’s illegal for people to visit your theaters. This is probably the main reason that it lost over $4.5 billion in 2020.
However, I’m still bullish on AMC and movie theaters in general.
I don’t necessarily have any stats to support this argument, but I’m a believer that people love the movies-theater experience. No matter how much cheaper and easier a streaming service is, it just doesn’t compare to going to the theater.
For me growing up, there was nothing better than getting together with friends and family. We’d sitt with 150 or so strangers in a dark room to share in the movie-going experience. When it came to epic movies like Harry Potter, Pirates of the Caribbean, The Dark Knight or The Avengers, people would literally dress up as characters. They would go at midnight to see them the minute they came out. No streaming service is ever going to have this same energy.
With that said, AMC was only squeaking by on profit margins of 2-3% before the pandemic. I think that the most likely future for AMC is that it’ll be acquired by a major streaming service who will then offer their original content in theaters. There was speculation earlier in the year that Amazon was going to acquire it but these rumors fell flat.
On the bright side, AMC has weathered the worst of the pandemic and now has a fresh surge of capital from the Reddit short squeeze. This will give it time to plan its next strategic move.
AMC stock was down about 60% in 2020 and climbed roughly 100% during the past five years (mainly due to the Reddit short squeeze). This is one of the more volatile media stocks on this list.
ViacomCBS (Nasdaq: VIACA)
In 2019, ViacomCBS emerged after the merger of CBS and Viacom. It’s one of the biggest traditional media companies and are reportedly in the process of getting into the streaming game (better late than never!).
Its revenues have stayed stagnant for the past several years. However, don’t let that fool you. In 2020, it posted total revenue of $25 billion and a net income of $2.42 billion. This puts it on par with Netflix in terms of income. Viacom also has a much lengthier list of assets compared to most companies. These include:
- Paramount Pictures
- CBS Entertainment
- MTV, Comedy Central
It also owns organizations associated with any of the above. Some of its most popular shows are SpongeBob, iCarly and Paw Patrol.
ViacomCBS’ stock was down roughly 10% in 2020 and about 15% over the past five years.
Disney (NYSE: DIS)
Note: I own a small position in Disney
If ever there was media stock to own, it’s The Mouse. After a handful of acquisitions over the past few years, Disney owns just about everything that you love.
A few of its assets include:
- Walt Disney Animation
- FX, Hulu
- National Geographic
- ESPN (including Monday Night Football)
- Lucasfilm (Star Wars)
- 20th Century Studios
This doesn’t even get into its 12 Walt Disney World Parks across the world, two water parks and four cruise ships.
The thing that makes Disney so formidable is its unique ability to promote media across so many different platforms. For example, it profits from a popular character like Baby Yoda in plenty of ways. They can give him his own show on Disney Plus, feature him in any of their parks, create plush dolls to sell, use him to promote new Star Wars movies, or even feature him in a crossover show with The Simpsons if they wanted.
Disney’s latest push has been Disney+, which currently has about 116 million subscribers after just two years. Across Hulu, ESPN+ and Disney+ it has nearly 174 million subscribers. For comparison, Netflix has about 209 million.
The Mouse posted total revenue of $65 billion in 2020 but actually posted a net loss of $2.86 billion. This was partially due to its theme parks being closed for most of the year.
Disney stock was up about 20% in 2020 and is up around 100% over the past five years.
Playboy (Nasdaq: PLBY)
The last of the traditional media stocks to buy is Playboy. If you didn’t realize that Playboy was a public company, that’s because it just went public via SPAC at the end of 2020.
Playboy is not nearly the company that Disney, Netflix or Viacom are. If anything, it’s more like AMC. It’s been struggling to retain readers for years and if there was ever a company to fall prey to “cancel culture” it’s probably Playboy.
With that said, Playboy could actually be at the beginning of a turnaround story. I say this because the Playboy brand is still one of the most recognizable in the world. Even if you’ve never flipped through a magazine there’s still a very good chance that you recognize the bunny silhouette.
The company published an investor relations report in March 2021, which had a few interesting points:
- It has 97% unaided brand awareness
- It wants to become known more as a “sexual wellness” company and has made a few acquisitions to make this possible. It predicts this market will be worth $400 billion by 2024.
- It posted total revenue of $147 million in 2020 which was an 89% increase from 2019.
- It wants to expand its art offerings, including NFTs.
It just received a fresh infusion of cash from going public to make this happen. Its stock is up close to 150% since going public.
Forbes Is Coming to the Market
One last media stock to buy…Forbes has announced that it’s going public via SPAC with Magnum Opus Acquisition. This deal is still being finalized and will finance Forbes with $145 million. If you’re interested in keeping an eye on this, Forbes will trade on the New York Stock Exchange under the ticker symbol FRBS.
Finally, the line has officially been blurred between traditional media and social media. By this, I mean that these two mediums have somewhat become interchangeable.
For example, former President Donald Trump got into the habit of just tweeting out his immediate thoughts on issues, instead of waiting for a scheduled press conference. Due to this, Twitter and other social media networks have started to be seen as sources of news, information and communication.
Now, we’re going to look at two social media stocks to buy but it’s worth noting that social media companies are facing pressure from lots of different directions. There are data privacy issues, allegations of fake news and tensions between politicians. Keep these in mind before buying into a social media stock.
These are two social media stocks to buy…
Twitter (NYSE: TWTR)
Of all the social media stocks, Twitter has had the toughest time finding its groove in terms of things that investors like to see. This means that it has had trouble maintaining consistent user growth and profitability. It posted a profit of $1.47 billion in 2019 but then a loss of $1.14 billion in 2020.
Its most recent product announcement is a new feature known as “Super Follow.” This will allow people to earn revenue from Twitter by charging a small fee for premium content.
With that being said, Twitter also has a reputation for being the quickest mode of getting news updates. The second a story breaks, it’s usually shared on Twitter before Facebook, Instagram, TikTok or Snapchat. This is incredibly valuable and shows that Twitter has top-of-mind awareness among its users.
Twitter is also run by CEO Jack Dorsey who is also the CEO of Square and has a good track record.
Its stock was up about 60% in 2020 and is up over 200% over the past five years.
Facebook (Nasdaq: $FB)
Facebook needs little introduction as it’s the biggest social media site in the world. It has about 2.7 billion users and also owns Instagram (one billion users) and WhatsApp (two billion users). This makes it the largest community of people ever created.
It generated a whopping $86 billion in revenue in 2020 as well as a profit of $29 billion. Even though this company has been around for some time, these numbers still represented an impressive 21% and 50% increase from 2019, respectively.
Facebook’s stock was up about 30% in 2020 and is up close to 200% over the past five years. It’s also one of the FAANG stocks. Click on that link to learn more about those tech giants.
Investing in Media Stocks, ETFs and Beyond
Looking for a social media ETF to buy? Try the Global X Social Media ETF.
Some of our younger readers might be quick to point out that TikTok is arguably today’s most popular social media site. Unfortunately, TikTok is owned by the Chinese company ByteDance, which is privately owned. Currently, there’s no way to buy stock in TikTok.
I hope that you’ve found this list of the best media stocks to buy to be valuable! As usual, all investment decisions should be based on your own due diligence and risk tolerance.
If you’re looking for more investing opportunities, consider signing up for Liberty Through Wealth below. It’s a free e-letter that’s packed with tips and tricks. You’ll hear directly from bestselling author and investment expert Alexander Green. He’s also worked as an investment advisor, research analyst and portfolio manager on Wall Street for 16 years.
About Teddy Stavetski
A University of Miami grad, Teddy studied marketing and finance while also playing four years on the football team. He’s always had a passion for business and used his experience from a few personal projects to become one of the top-rated business writers on Fiverr.com. When he’s not hammering words onto paper, you can find him hammering notes on the piano or traveling to some place random.