Rivian continued its rally on Thursday, rising as much as 15%. That pushed its market capitalization to $86 billion, above that of Ford Motor Co., despite having no meaningful revenue. The electric vehicle maker surged 29% in its first day of trading after attracting a flurry of retail investor buying. “The big question is whether Disney can continue to exceed expectations for streaming subscriber growth without sacrificing profitability."Īnother valuation debate right now surrounds Rivian Automotive Inc.
“Disney’s singular aim was to garner that Netflix-type multiple, and they’ve succeeded mostly," said Ranganathan. Netflix customers contribute almost three times the average revenue per month than Disney+ subscribers. The premium is due to a chasm in the amount of revenue the companies generate per streaming subscriber, according to Geetha Ranganathan, a senior analyst at Bloomberg Intelligence. Netflix is priced at about twice Disney’s enterprise value to projected Ebitda, according to Bloomberg data. Netflix shares trade at a widening premium to Disney’s based on Wall Street’s preferred valuation measure, enterprise value to projected earnings excluding costs like interest and taxes. Average price targets imply 26% upside for Disney and 4% for Netflix. About 78% of analysts have buy ratings on the former and none recommend selling, while 73% recommend buying Netflix and five have sell ratings. Wall Street is generally more bullish on Disney than Netflix. His overweight rating “is based on the view that Disney is one of a shortlist of global streaming platforms that can achieve significant scale and profitability." But he doesn’t see that priced into the shares yet. For Morgan Stanley analyst Benjamin Swinburne, streaming is key to Disney’s investment case.