From feast to famine, Roku (NASDAQ:ROKU) and Disney (NYSE:DIS) shares have gone from being darlings of the streaming video revolution in 2019 to languishing as market laggards in 2020. When Roku stock closed below $100 earlier this week, it was the first time the streaming entertainment pioneer had ended a trading day in the double-digits in more than eight months.
Disney buckling below $100 in Thursday's sell-off inspired an even more distant memory. You have to go back more than 21 months -- to the springtime of 2018 -- to find the last time the media giant wasn't trading in the triple-digits.
No one thought 2020 would play out this way. Roku stock more than quadrupled in 2019, making it the market's best-performing large cap. Disney shares also handily beat the market last year, a rare feat for the blue chip staple to accomplish during a strong Wall Street year.
It's a different story in 2020, though. Roku and Disney shares are trading 41% and 37% lower, respectively, year to date through Thursday's close.
Field and stream
The coronavirus sell-off has been brutal, but with the market trading 23% lower in 2020, one has to wonder why Roku and Disney are faring so much worse. Roku and Disney were big winners in 2019 on the success of the dominant roles in streaming entertainment, the one niche that will undeniably thrive in the coming weeks.
With social gatherings getting nixed and folks staying closer to home, there's going to be a lot more streaming going on now. If the market was impressed with the 11.7 billion hours of content served through Roku in its latest quarter, one can only imagine how that metric will explode in 2020. Roku began the year with 36.9 million active accounts, 36% more than it had on its platform a year earlier.
The arrival of Disney+ in November has also had a meteoric trajectory. Disney had 10 million subs on the streaming service within its first day of operation, rising to 28.6 million by early February.
Roku and Disney are two of the three undeniable titans of the streaming video revolution. The third is Netflix (NASDAQ:NFLX), of course, and that stock's year-to-date carnage has been limited to a decline of less than 3% in 2020. Why are Roku and Disney getting crushed this year?
Disney has problems. All of its theme parks worldwide will be closed by the end of this weekend. Its recent theatrical releases have been disappointments as folks steer clear of the local multiplex. Pro sporting leagues recently calling off games will sting its ESPN business. However, at least some of the negativity there should be offset by the success of Disney+ and how its meandering media networks division will thrive with a captive audience.
Roku is in even better shape. It's not operating cruise lines or theme parks like the House of Mouse. It's a pure play on folks spending more time streaming content in their living rooms, and that's exactly what we're about to see happen. And unlike Netflix with its relatively high monthly subscription rate, Roku is a free platform for viewers. It generates money from the ads it pushes out to its users, and you know marketers are going to be shifting more of their advertising budgets to Roku's as a way to reach homebound consumers.
Roku and Disney have gone from being top stocks in 2019 to surprising market laggards this year. The pessimism isn't likely to last, and it would be surprising if both stocks aren't back above $100 later this year.