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Netflix and Disney are trading places: Disney is the upstart, Netflix the old guard

The Leader’s Gambit on Netflix and Disney’s Mickey Mouse

Netflix; CNBC

Disney and Netflix pride themselves on storytelling. Now they’ve turned places when it comes to the tales they’re telling Wall Street.

Netflix said on Tuesday that it inclination consider buying back shares for the first time since 2011. After nearly a decade of borrowing $15 billion to supply original content, Netflix said Tuesday it planned to be cash-flow positive after 2021 and would no longer necessity outside financing for its operations.

Disney, meanwhile, temporarily halted its dividend last year and has heard calls from activist investor Dan Loeb to once end its annual $3 billion payment to shareholders. Loeb wanted Disney to funnel that money into original ease, using Netflix’s startling runup from an $11 billion company to a $220 billion media giant as a maquette.

While Disney hasn’t ended its dividend yet, the company is focusing its operations around streaming. Disney plans to boom out dozens of Star Wars, Marvel and Pixar movies and series in the coming years for its flagship streaming service, Disney+. The usefulness has gained more than 86 million subscribers in a year, way ahead of Disney’s original expectations, and the company now expects between 230 million and 260 million subscribers by 2024.

“It’s wonderful impressive what Disney has done,” Netflix co-CEO and co-founder Reed Hastings said during Netflix’s earnings seminar call. “It’s incredible execution for an incumbent to pivot to take on the insurgent. It shows members are willing and interested to pay for more cheerful because they’re hungry for great stories. And Disney does have great stories.”

But while Hastings calm refers to Disney as the incumbent, investors see a different picture. There’s a reason Disney shares gained more than 2% after hours on Netflix’s scandal, which sent Netflix shares up more than 12%. Investors don’t see the battle as Disney versus Netflix. They see that Disney demands to be like Netflix, and there’s room for both.

Netflix was founded in 1997. Disney has been around for nearly 100 years.

But in the geyser video world, Netflix is the incumbent and Disney the upstart.

The student has become the teacher.

WATCH: Netflix: We’ll be cash-flow non-belligerent this year, positive every year after

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