Do you love the Hulu streaming service and wonder how you can invest in and profit from Hulu. We provide you all the information you need to make a solid investment decision.
Hulu is one of the fastest-growing video streaming sources. The name Hulu comes from the Mandarin Chinese word hùlù (互录/互錄), which means interactive recording.
Hulu Stock Price
There is no Hulu stock available directly to the public because Hulu is a privately owned joint-venture. This means that there is also no specific Hulu stock price or a stock ticker for the company. The only way to invest in Hulu stock is to buy shares in the companies that own Hulu, Disney, or Comcast.
Who Owns Hulu Stock
Hulu began in 2006 as a joint venture of NBC Universal, Facebook, Microsoft, Myspace, and Yahoo!. Hulu began streaming in the United States in March 2008. The Walt Disney Company began investing in Hulu in 2009. 21st Century began buying into Hulu soon afterward.
In 2020, Disney owned 67% of Hulu, and Comcast owned 33% of Hulu. Disney will buy Comcast’s 33% of Hulu in January 2024, under an agreement with Comcast. Thus Disney will own 100% of Hulu in 2024 – if the deal goes through.
Why are Investors Interested in Hulu Stock
Hulu, like Netflix, is reshaping the modern entertainment world. With significant investments in original programming and a “no cable” service that streams directly to smart TVs, they are straightforward to set up and use.
Investors are interested in Hulu because it gained 10.7 million American subscribers in 2019 and 2020.
Netflix vs. Hulu Stock
Here are the key differences between Netflix and Hulu.
|Hulu vs. Netflix||Hulu||Netflix|
Hulu is a premium video streaming service available in the United States. Hulu offers two plans, an ad-supported subscription for $5.99 a month and a commercial-free plan for $11.99 a month.
The number of paying Hulu subscribers in the United States grew from 22.8 million in the first quarter of 2019 to 35.5 million at the end of the third quarter of 2020, Statista estimates.
Hulu offers many original programs, including The Handmaid’s Tale, the Marvel superhero show Helstrom, Books of Blood, The New York Times Presents, and Monsterland. Hulu produces some shows and distributes some Disney content.
Hulu is one of the few streaming services that can compete with Netflix (NFLX).
Netflix had 72.9 million U.S. subscribers at the end of the 2nd Quarter of 2020, Statista estimates. Netflix (NASDAQ: NFLX) had 193 million global customers at the end of 2019.
Netflix claims it added 26 million new subscribers in the first two quarters of 2020, The Verge reports. Netflix also claims to have added 10.2 million subscribers in the 2nd Quarter of 2020. Netflix bases those numbers on a global subscriber base. Hulu operates in just one country, the United States.
Netflix is the clear, undisputed heavyweight of the premium streaming content world. But it faces many threats, from Hulu, Disney+, and even Google’s YouTube.
Disney Hulu Stock
Investing in Hulu is easy because the Walt Disney Company (NYSE: DIS) owns 67% of Hulu.
Disney got a majority stake in Hulu by buying 21st Century Fox in March 2020. Disney also bought the historic 20th Century Movie studio and Fox’s programming library in the deal.
The Fox purchase gave Disney access to enormous amounts of content, including; The X-Men, Wolverine, The Fantastic Four, MASH, The Simpsons, Buffy the Vampire Slayer, Planet of the Apes, and Deadpool. The Fox deal gave Disney control of all the Marvel superheroes with the exceptions of Spider-Man and Venom.
Disney offers a video streaming bundle that includes Hulu, Disney+, and ESPN+ for $12.99 a month in the United States. Disney+ offers Disney, Marvel, Pixar, Lucas Film (Star Wars), and National Geographic programming. ESPN+ offers live sports including NBA Basketball, UFC fighting, Major League Baseball, College Football, the National Hockey League, Tennis, Major League Soccer, College Basketball, EFL football, and PFL football.
Some popular ESPN programs, including NFL football, do not stream on ESPN+. ESPN+ also broadcasts original sports news and commentary programs and some dramatic shows with sports themes.
Disney+ plus acquired 28.6 million subscribers in its first three months of business between November 2019 and February 2020, Variety claims. ESPN+ had 6.6 million subscribers at the end of 2019.
Why Investors want Streaming Video
Many investors are buying Disney and Netflix stock because streaming video could generate enormous amounts of float.
Float is Warren Buffett’s term for a steady stream of cash a company generates from subscriptions. Disney generates float from Hulu, ESPN+, and Disney+ subscriptions.
Investors are interested in streaming video float because it could benefit from coronavirus. The pandemic closes entertainment venues such as movie theaters and theme parks. Even in areas where entertainment venues are open many people are afraid to enter them because of coronavirus.
Vast numbers of people are stuck at home because of coronavirus. Those people need entertainment, and streaming video can provide cheap entertainment at home.
Investors believe Netflix and Disney will generate enormous amounts of float from streaming video platforms during the pandemic. Disney made the lucky decision of launching a massive streaming video platform, Disney+, in November 2019, just before the pandemic.
Other companies such as Comcast (NASDAQ: CMCSA) and AT&T (T) are entering the streaming video market for the same reason as Disney. Streaming video can generate revenue when movie theaters are closed and advertising revenues are collapsing.
The Walt Disney Company (DIS) is a popular stock because it is cheaper than Netflix (NFLX) and has paid dividends in the past.
Disney last paid a semiannual dividend of 88₵ on January 16, 2020. Disney suspended the dividend until further notice in May 2020 because of coronavirus.
Disney suspended its dividend because coronavirus has devastated some of its businesses, including theme parks and theater-release movies. The Walt Disney Company reported a -$4.996 billion quarterly operating loss on June 30, 2020.
Disney’s quarterly revenues fell from $20.858 billion on December 31, 2019, to $18.009 billion on March 31, 2020, to $11.779 billion on June 30, 2020. Disney’s quarterly gross profit fell from $6.091 billion on March 31, 2020, to $3.883 billion on June 30, 2020.
Disney will need massive growth in streaming video revenues to make up for losses elsewhere in the Magic Kingdom. Disney has borrowed enormous amounts of money to finance its operations.
Disney reported a quarterly financing cash flow of $5.499 billion on March 31, 2020. The quarterly financing cash flow grew to $8.303 billion on June 30, 2020. The quarterly financing cash flow is a record of the money a company raises by selling debt or borrowing.
Disney is a cash-rich company. The Magic Kingdom had $23.115 billion in cash and short-term investments on June 30, 2020. The cash and short-term investments grew from $14.339 billion on March 31, 2020.
I think Disney is a strong company because it has enough cash to survive coronavirus. Disney has the cash to make huge acquisitions. For instance, Disney can expand Hulu to other countries or purchase big streaming video platforms in countries such as Indie. A huge and smart purchase Disney can make is to buy the 33% of Hulu that Comcast owns before 2024. Under its current agreement, Disney will not get full ownership of Hulu before January 2024.
Disney is a good company with some potentially lucrative assets, including Disney+ and Hulu, and a massive library of popular movies and TV shows. Disney also some huge liabilities, including empty theme parks and theater movies it cannot release. The superhero film Black Widow, for instance.
Black Widow was scheduled for release in Spring 2020 but was delayed. Disney had not announced a date for Black Widow’s release in October 2020.
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The other stock investors can buy to get a piece of Hulu is Comcast (CMSA). Comcast will retain 33% of Hulu until January 2024 under a deal with Disney.
In 2019 Comcast Corporation (NASDAQ: CMSA) and Disney made a “put-call deal” that could force Hulu’s sale in January 2024. Disney management made the deal to keep Comcast from selling its Hulu stake to a competitor such as Netflix (NFLX). The deal makes Disney the only first buyer for Hulu.
The Comcast Corporation (CMSA) is a telecom conglomerate that owns the Peacock video streaming service, the NBC broadcast television network, Dream Works Animation, the historic movie studio Universal, and many cable TV networks. Comcast’s cable networks include CNBC, USA, and MSNBC.
Other Comcast subsidiaries include AT&T Broadband, the British broadcaster Sky, the streaming service XUMO and Xfinity. Xfinity offers cable television, home service, mobile phone service, internet, and home security services in many American cities. Xfinity operates in Denver, Salt Lake City, Chicago, Los Angeles, Houston, Miami, Atlanta, Phoenix, Detroit, New York, Boston, Washington DC, and Boston.
Comcast had 21.2 million television subscribers, 28.6 million internet subscribers, 11.2 million voice (telephone) subscribers, and 1.37 million security subscribers in 2019, Expanded Ramblings estimates.
Comcast CEO Brian Roberts claims Peacock had 15 million streaming video subscribers in September 2020. Roberts hopes Peacock will attract between 30 million and 35 million subscribers by 2024.
Peacock’s programming includes Premier League Soccer, NBC TV shows, Universal movies, DreamWorks Animated movies, such as Despicable Me, NBC News, and WWE pro wrestling.
Comcast generates enormous amounts of float from all those subscribers. Comcast reported a quarterly operating cash flow of $8.643 billion and a quarterly ending cash flow of $5.367 billion on June 30, 2020. Comcast had $13.935 billion in cash and short-term investments on June 30, 2020.
Comcast makes enormous amounts of money. Comcast reported a quarterly gross profit of $9.252 billion, a quarterly operating income of $4.647 billion, and quarterly revenues of $23.715 billion on June 30, 2020.
Comcast also offers enormous value. Comcast had $265.978 billion in total assets on June 30, 2020.
Value investors buy Comcast because its shares are often cheap. Mr. Market paid $44.53 for Comcast shares on October 20, 2020.
Comcast will pay a 23₵ dividend on October 28, 2020. Dividend.com estimates Comcast’s dividends have grown for nine years. Overall, Comcast paid a 92₵ annualized dividend and a 2.02 in October 2020.
Thus, Comcast shares could be a cheap way to buy a piece of Hulu and streaming video.
Companies similar to Hulu you can invest in
Several companies operate video streaming services similar to Hulu. A number of those companies are publicly traded.
AT&T (NYSE: T)
The giant telecom AT&T (T) owns the HBOMax streaming service through its Time Warner or Warner Media subsidiary.
Warner Media claims HBOMax and the HBO Cable TV network had 36.3 million US subscribers on June 30, 2020. However, Warner Media admits there were only 4.1 million HBOMax activations in 2nd Quarter 2020, Variety reports.
HBOMax streams many popular shows, including; The Sopranos, Game of Thrones, South Park, Doctor Who, Friends, Sesame Street, The Big Bang Theory, and several original series. HBOMax subscribers also have access to the Turner Classic Movies, MGM, and Warner Brothers film libraries and the Criterion Collection of classic movies.
AT&T’s holdings include the Warner Brothers movie studios, HBO, the Hanna Barbara animation studio, Looney Tunes (Warner Brothers animation), DC Comics (home of Batman, Superman, and Wonder Woman), and several cable TV channels. AT&T’s cable TV channels include HBO, Turner Classic Movies, TNT, Cinemax, TBS, the Cartoon Network, and CNN.
Other AT&T and holdings include regional telephone companies such as Michigan Bell, Pacific Bell, BellSouth, and Illinois Bell, the Direct TV satellite television service, New Line Cinema, Castle Rock Entertainment, Turner Broadcasting, 50% of the CW broadcast TV network, Turner Sports, and 30% of the ticket website Fandango.
AT&T makes enormous amounts of money. AT&T reported a quarterly gross profit of $22.967 billion, a quarterly operating income of $3.532 billion, and quarterly revenues of $40.95 billion on June 30, 2020.
AT&T generates enormous amounts of cash from its subscriptions. AT&T reported a quarterly operating cash flow of $12.059 billion and a quarterly ending cash flow of $6.991 billion on June 30, 2020. AT&T had $16.941 billion in cash and short-term investments on June 30, 2020.
AT&T offered an enormous amount of value in the form of $547.898 billion in total assets on June 30, 2020. Many will consider AT&T a value investment because of its cheap shares. Mr. Market paid for $26.76 for AT&T (T) shares on October 20, 2020.
AT&T will pay a 52₵ quarterly dividend on November 2, 2020. AT&T shares offered an annualized dividend of $2.08 and a dividend yield of 7.61% on October 20, 2020. AT&T could be a lower-cost alternative to Disney and Netflix.
ViacomCBS (NASDAQ: VIAC)
ViacomCBS (VIAC) owns the successful ad-supported free streaming service PlutoTV and a subscription streaming service known as Paramount Plus. Paramount Plus was formerly CBS All Access.
Statista estimates Pluto had 24 million active users worldwide in March 2020. Pluto TV’s active user base grew from 15 million in April 2019 to 24 million in March 2020.
Pluto’s subscriber base more than doubled between 2018 and 2020, USA Today estimates. Pluto TV offers two hundred channels of television with an interface that resembles a traditional TV deal.
PlutoTV creates “channels” devoted to classic TV shows such as Star Trek: The Next Generation, Baywatch, and Three’s Company. Another popular Pluto TV channel shows nothing but James Bond movies.
ViacomCBS’s other streaming venture CBS All Access, has not been as successful. Variety estimates CBS All Access had 10 million subscribers in January 2020. ViacomCBS plans to expand and reorganize CBS All Access and change the name to Paramount Plus. Paramount is a more prestigious brand than CBS.
ViacomCBS owns the historic American broadcast TV network CBS and the historic movie studio Paramount Pictures. Other Viacom Subsidiaries include VH1, MTV, Nickelodeon, and 50% of the CW Broadcast network. However, one CBS All Access series Star Trek: Picard; a follow up to Star Trek: The Next Generation, broke streaming records, Tech Crunch estimates.
ViacomCBS makes some money; it reported a quarterly gross profit of $2.79 billion, quarterly revenues of $6.275 billion, and a quarterly operating income of $1.286 billion on June 30, 2020. ViacomCBS also reported a quarterly operating cash flow of $795 million and an ending cash flow of $1.669 billion on June 30, 2020.
ViacomCBS’s quarterly financing cash flow of $1.128 billion shows it borrowed money to stay afloat. ViacomCBS had $2.288 billion in cash and short-term investments on June 30, 2020. Viacom offered some value in the form of $51.188 billion in total assets and a low stock price of $27.76 on October 21, 2020.
Can Hulu Compete with Netflix, Google, and Amazon?
Streaming video is a tough business because three giant tech companies compete in the market.
Netflix (NFLX) dominates the market with 73.08 million U.S. subscribers and 167 million subscribers worldwide in the third quarter of 2020. Alphabet (GOOG) subsidiary YouTube had two billion users worldwide in May 2020, Statista estimates.
Amazon Prime had 112 million US subscribers in December 2019, Statista estimates. Amazon Primes give users access to Amazon’s streaming video service. That makes Amazon (AMZN) a player in streaming video.
Amazon, Alphabet, and Netflix are cash0rich companies, but their shares are expensive. Video is a sideline at Amazon and Alphabet. Alphabet’s focuses are research and development and its Google search engine. Amazon focuses on retail.
I think there is a strong possibility Alphabet (GOOGL) will spin-off YouTube to avoid antitrust action in the United States. The US Justice Department and 11 state governments filed an antitrust lawsuit against Alphabet on October 20, 2020.
If the Justice Department is successful, courts could break Alphabet up. That could lead to a YouTube initial public offering (IPO) and a popular new stock.
Hulu and Disney’s success proves there is room for new competitors in the streaming market. Only time will tell if investors can make money from those competitors’ stocks.
Disney (DIS) could be a good long-term value investment because of its stake in Hulu.