The S&P 500 Communications Services Index has risen 20% this year, higher than the 17% increase recorded by the S&P 500 Index, and is better than all other sectors except technology and real estate in 11 sectors. Such a strong performance was largely attributed to the recovery of Facebook (FB.O), as investors bet that the company will continue to grow even as the world's largest social network faces regulatory hurdles.
The June quarterly results of Disney, CBS. N and VIAB. O will keep investors focused on the increasingly fierce competition between the video and audio streaming media industry and market leader Netflix (NFLX. O). These enterprises belong to the communication service sector.
Netflix's July 17 earnings report showed an unexpected loss of U.S. subscribers in the second quarter, disturbing investors already worried about Disney's upcoming streaming services. Since then, its share price has fallen 14%.
Disney's family-friendly Disney + service, which will be launched on November 12, includes a series of new and classic TV shows and movies, and is considered the biggest threat to Netflix. Disney's share price hit a record high Monday and has risen 28% this year.
"An analysis was disseminated among investors to discuss the number of subscribers to Netflix and the growth prospects for Disney services over the next three to four years, as well as the huge differences in valuations between the two companies," said Chuck Carlson, chief executive of Horizon Investment Services in Hammond, Indiana.
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