Streaming service has been integrated into our daily lives, whether that is media, music, entertainment, or more. As the internet became more accessible and its capability improved, the market for streaming service has been exponentially growing.
As of 2023, almost a quarter of the world population uses streaming service. In the United States, 99% of all households are subscribed to at least one or more paid streaming services.
However, with costs of living rising in every aspect of life, these streaming services seem to be the first one to be cut from people’s bills. In 2023, 45% of Americans canceled their streaming subscription because they were simply too expensive.
Due to this reason, investors should be cautious about streaming service stocks at the moment. In fact, investors should sell these three streaming service stocks outlined below before they crash and lose all their money.
Spotify (SPOT)
For years, Spotify (NYSE:SPOT) has been dominating the music streaming service, acquiring more than 615 million active listeners around the world. Out of the 615 million, about 240 are monthly subscribers and more than 100 come from the U.S.
The majority of Spotify’s revenue is generated from its premium service that requires a monthly subscription fee, while paying a hefty sum of loyalty to music labels and artists.
While the Spotify stock has been steadily and constantly rising over the past few years, the future of the company does not look promising. Starting this month, the Swedish music streaming service raised monthly fees for individual Premium users by a dollar.
For duo plan users, the rise in cost was $2 and for family plan users, it was a $3 increase. In addition to the price hike, the company’s CEO Daniel Ek has recently sold $250 million worth of Spotify stocks. As people start to find the new premium plans costly, Spotify’s smooth sailing growth will stop. Investors should sell before this happens.
Disney (DIS)
Disney (NYSE:DIS) is one of the largest multimedia and streaming service companies in the entertainment industry. Its history goes back more than 100 years ago when it was founded by Walt Disney in Los Angeles, California.
Since its creation, the entertainment powerhouse has branched its business into various units including television, streaming media, consumer products, theme parks and publishing.
Disney has been investing aggressively in other parts of its business. Over the next decade, Disney plans to spend over $60 billion in the Experiences division, with half of the money going to theme parks and the other half going to its cruise lines.
While Disney has been successful with its theme park business, its streaming platform Disney+ has been burning cash. Since 2019, the streaming platform has cost Disney more than $11 billion in operating losses and it has yet to make any profit.
2024 might be another year Disney+ will go profitless, or if it does, it won’t come until the very end of the year. Investors should not hold high hopes for Disney for a while and should sell if they own any positions.
Paramount Global (PARA)
Paramount Global (NASDAQ:PARA) is an American mass media and streaming service company. Compared to its competitions like Netflix, Disney and Warner Bros, Paramount is relatively an infant in the business.
The company was founded as a result of the merger of Viacom and CBS. December of 2024 marks the fifth anniversary for Paramount Global.
However, its stock has been struggling massively. The stock is down about 22% since the beginning of the year and about 31% in the past 12 months.
The past year, the company lost $1.6 billion in streaming. The American streaming service company has no clear catalyst that will provide steady income in the long run.
To add on to this, Warren Buffett made it a public announcement that his corporation Berkshire Hathaway has sold all of its position in Paramount Global, openly admitting that he has lost money with those investments. Before it’s too late, investors should sell positions in Paramount Global.
On the date of publication, Andy Kim did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of the publication, the responsible editor held a LONG position in (SPOT).