How to Invest in Hulu Stock

Hulu has quietly grown into a major streaming service. It has more than 48 million subscribers and roughly double the number of viewers. What sets Hulu apart from other streaming services is that it offers customers a live TV option, which enables consumers to cut the cord with a viable alternative to cable's live TV.

The Walt Disney Company (DIS -0.04%) and Comcast (NASDAQ:CMSCA) own Hulu. However, Disney is on track to become the sole owner of the streaming service in 2024. The deal will enable Disney to become an even bigger streaming powerhouse.

With Disney agreeing to buy the remaining stake in Hulu, it seems unlikely that the streaming service will complete an initial public offering (IPO) anytime soon. However, people interested in investing in Hulu and the streaming trend have many options worth considering while waiting to see if Hulu ever goes public.

Is it publicly traded?

Is Hulu publicly traded?

Hulu wasn't a publicly traded company as of early 2024. The streaming company was a joint venture owned by Disney (67%) and Comcast (33%). Comcast exercised its right to sell its interest in Hulu to Disney in late 2023 for a floor price of $8.6 billion (valuing the streaming service at $27.5 billion). The companies expect the deal to close in 2024 after completing an appraisal of the business that could value Hulu even higher. Disney will then own 100% of Hulu stock.

When will it IPO?

When will Hulu IPO?

Hulu didn't have an IPO on the calendar as of early 2024. The company likely won't complete an IPO anytime soon. Disney was in the process of acquiring full control over the streaming company. The entertainment company sees owning 100% of Hulu as crucial to its streaming ambitions.

How to invest

How to buy Hulu stock

You can't currently buy shares of Hulu since it's not a publicly traded company. However, there are alternative ways to invest in the streaming company and the trends driving its growth. Three Hulu alternatives are:

1. The Walt Disney Company

The Walt Disney Company is the best way to invest in Hulu. The company owned two-thirds of Hulu as of early 2024, with plans to acquire the remaining one-third from Comcast by the end of the year. In addition to Hulu, Disney has two other streaming services (Disney+ and ESPN+). Meanwhile, the broader Disney portfolio also features Pixar, Lucas Films, theme parks, and cruise ships. Disney is an entertainment and streaming behemoth.

2. Netflix

Netflix (NFLX -0.63%) is a streaming giant. It ended 2023 with more than 260 million global subscribers, about a 13% year-over-year increase. Netflix generated almost $33 billion in revenue during its 2023 fiscal year. It also booked almost $5.5 billion in profit and roughly $7 billion in adjusted free cash flow. Meanwhile, Netflix expects to continue growing in 2024 as it invests in new content, broadens its offerings (games and live sports), and taps into the lucrative digital ad market.

3. Comcast

Comcast still owned a third of Hulu as of early 2024. However, the media and entertainment giant agreed to sell its stake to Disney in late 2023 in a deal that should close by the end of 2024. The sale will enable Comcast to cash in on the value of its Hulu stake, which is worth at least $8.6 billion. That sale will give the company more money to return to shareholders through its share repurchase program -- which it boosted to $10 billion in early 2024 -- and invest in its Peacock streaming service.

Investors who want to buy one of these Hulu alternatives can purchase shares in any brokerage account. Here's a step-by-step guide on how to invest in stocks like Hulu.

Step 1: Open a brokerage account

You'll need a brokerage account before buying shares of any company. If you still need to open one, here are some of the best-rated brokers and trading platforms. Take your time to research the brokers to find the best one for you.

Step 2: Figure out your budget

Before making your first trade, you'll need to determine a budget for how much money you want to invest. You'll then want to decide how to allocate that money. The Motley Fool's investing philosophy recommends building a diversified portfolio of 25 or more stocks you plan to buy and hold for at least five years.

You don't have to get there on the first day. For example, if you have $1,000 available to start investing, you might want to begin by allocating that money equally across at least 10 stocks and then grow from there.

Step 3: Do your research

It's essential to thoroughly research a company before buying its shares. You should learn about how it makes money, its competitors, its balance sheet, and other factors to ensure you have a solid grasp on whether the company can grow value for its shareholders over the long term.

Step 4: Place an order

Once you've opened and funded a brokerage account, set your investing budget, and researched the stock, it's time to buy shares. The process is relatively straightforward. Go to your brokerage account's order page and fill out all the relevant information, including:

• The number of shares you want to buy or the amount you want to invest to purchase fractional shares.
• The stock ticker (DIS for Disney, NFLX for Netflix, and CMSCA for Comcast).
• Whether you want to place a limit order or a market order. The Motley Fool recommends using a market order since it guarantees you buy shares immediately at market price.

Once you complete the order page, click to submit your trade and become a shareholder in one of these streaming stocks while you wait to see whether Hulu ever goes public.

If Hulu goes public, investors will follow a similar process to buy its IPO stock. Should shares become available after an IPO, you would fill out the order page at your brokerage account with Hulu's selected stock ticker and submit your trade.

Profitability

Is Hulu profitable?

Disney and Comcast don't break out Hulu's results in their financial reporting. However, according to IndieWire, Hulu is the only profitable streaming service besides Netflix. Disney has also confirmed that Hulu is profitable. While the streaming service is profitable, it reportedly doesn't generate positive free cash flow because its investments in content and technology outstrip its earnings.

Once Disney acquires full ownership of Hulu from Comcast, it will have more control over that company's operations and costs. It can also further integrate it into its family of brands. Disney has already started combining the app with Disney+ to enable subscribers to access content from both services. Disney should be able to leverage its growing streaming scale to reduce costs and increase the profitability of Hulu and its Disney+ streaming service.

Should I invest?

Should I invest in Hulu?

You can't invest directly in Hulu because Disney and Comcast own the company. However, you can indirectly invest in the company through Disney, which owns a majority of the streaming service and will soon own the entire business.

Investing in Disney gives you exposure to the growth of streaming through Hulu, Disney+, and ESPN+. In addition, Disney owns a treasure trove of beloved characters, brands, and experiences. The Disney family of companies also includes Marvel, Pixar, and Lucas Films. Meanwhile, Disney owns several theme parks, a cruise line, and other experiences. While the company's profits have suffered since the pandemic (and its ramped-up spending to grow its streaming services), it's working to improve its profitability, which should benefit shareholders over the long term.

ETFs

ETFs with exposure to Hulu

Exchange-traded funds (ETFs) enable you to invest passively in the broader stock market or specific themes without actively managing a portfolio of stocks.

Although you can't use ETFs to invest in Hulu passively, you can use them to gain exposure to its parent company, Disney. Some top ETF options to passively invest in Disney and the business of streaming include:

• Vanguard Communication Services ETF (VOX 2.98%): This fund's main objective is to track stocks in the communication services sector. The ETF held shares of 118 companies as of early 2024. Disney was its seventh-largest holding at 4.1% of its assets. It also held shares of Netflix (4.4%) and Comcast (4.4%). The fund had a 0.1% ETF expense ratio.
• Invesco S&P 500 Equal Weight Communication Services ETF (NYSEMKT:RSPC): The fund has a roughly equal portfolio weighting to all the communication services stocks in the S&P 500. This ETF held shares of 26 companies in early 2024, including Disney (4.4% of its holdings), Netflix (5.4%), and Comcast (4.7%). The ETF had a 0.4% total expense ratio.
• iShares Global Comm Services ETF (IXP 3.14%): This ETF gives investors broad exposure to the entire global communication services industry. It held 65 companies in early 2024, including Disney (4.2% of its assets), Netflix (5.1%), and Comcast (4.5%). The ETF had a 0.42% expense ratio.

Related investing topics

The bottom line on Hulu

While you can't invest directly in Hulu because it's not an independent company, you can indirectly invest in the streaming service through its owner, Disney. It's one of several streaming services Disney operates and the only profitable one in the group. Disney is working hard to improve the profitability of its streaming services and other operations, which should help boost value for its shareholders in the coming years.

FAQ