Walt Disney's (DIS 1.62%) direct-to-consumer streaming business will be the House of Mouse's biggest segment by 2024, said Morgan Stanley analyst Benjamin Swinburne in a note to investors on Friday. Going one bold step farther, Swinburne predicted that Disney's streaming subscriber base could even "match or surpass" Netflix (NFLX -1.04%) by 2024. The analyst's confidence in Disney's streaming business highlights the company's rapid transformation into a digital behemoth -- especially considering that Disney didn't fully acquire Hulu and launch its flagship Disney+ streaming service until last year.
It's safe to say that Disney's foray into streaming has been a major success. Indeed, the company's momentum in the fast-growing space has helped the stock soar to all-time highs. All of this begs the question: With Disney executing so well in this important growth vector, is now a good time to buy Disney stock?
Is it too late to buy Disney stock?
Of course, some investors may reason that they missed their chance to buy Disney stock at a good price. After all, the stock surged on Friday, following the company's Investor Day presentation. The stock closed the trading day up nearly 14%.
During the important event, Disney shared more of its plans for its streaming business -- and investors loved the news. Management told investors it now expects to garner 350 million subscribers between its Disney+ (including the company's international-focused Star streaming service) Hulu, ESPN+ services by fiscal 2024 -- up from about 137 million today. For some context, Netflix expects to end 2020 with just over 200 million subscribers.
In addition, Disney announced ambitious plans for new content, including many new Disney, Star Wars, Marvel, National Geographic, and Pixar shows made specifically for Disney+.
Thursday's news was undoubtedly exciting for Disney shareholders, easily justifying the stock's sharp gain on Friday. Indeed, given how significant Disney's announcements were last week, shares arguably remain compelling despite the stock's sharp run-up on Friday.
Disney's streaming business is just getting started
It's worth emphasizing that Disney's streaming business really is in its early innings. Consider the company's momentum in Disney+, ESPN+, and Hulu subscriber growth. In the company's Oct. 3-ended fiscal fourth quarter, the services subscriber counts were at 73.7, 10.3, and 36.6 million, respectively -- up from zero, 3.5 million, and 28.5 million in the year-ago period.
Even though these are still early days for Disney's fast-growing streaming business, it has already morphed into a meaningful driver for the company. Walt Disney's "direct-to-consumer and international" segment revenue jumped 41% year over year in fiscal Q4 and accounted for $4.9 billion of the company's $14.7 billion of total revenue.
For investors interested in owning one of the most resilient and broad-based streaming businesses, backed by arguably the world's most powerful content creation engine, it's likely not too late to get in on this stock. Sure, it may be a bumpy ride. But given the company's early momentum in streaming, Disney looks poised to grow into a dominant streaming player that could reward investors handsomely over the long haul.