Netflix (NASDAQ:NFLX) Topples Walt Disney Co (NYSE:DIS) In Terms Of Market Cap


The media supremacy battle pitting Netflix (NASDAQ:NFLX) and Disney (NYSE:DIS) seem to be shifting in favor of the former. For the first time in history, Netflix’s market cap eclipsed that of Disney. The shift established Netflix as the most valuable media company globally. Netflix’s market cap currently stands at $152 billion, which is way higher than Disney’s market cap which stands at $148.5 billion.

The force behind Netflix shares driving it ahead

In the recent days Netflix shares have amassed a lot of momentum which has seen its market cap overtake that of its rival Walt Disney and hence crowning itself as the most valuable media company globally.

Although the two companies have a close but cautious relationship over the years the table may change going forward. The latest development will see the two companies to on each other head-on. The competition is likely to become more heated and visible than before. It will be a multi-billion dollar battle involving the old and the new.

Technically, going beyond figures on the paper, Disney may be still bigger than Netflix. Earnings projections indicate that Disney’s revenue is expected to go up four times this year. Additionally, Disney is regarded by many as averagely more profitable than Netflix. Disney’s enterprise value stands at $173.7 billion including debt. This is way higher than Netflix’s enterprise value, which stands at $155.9 billion. So what made Netflix market cap overtake that of Disney?

Premium valuation

Market cap is calculated by multiplying its stock price by the number of outstanding shares. The P/E ratio is obtained by dividing the stock price by the estimated earnings per share for the coming year. Disney’s P/E ratio is 14 times higher than this year’s earnings and 122 times higher than next year’s earnings. Netflix’s share is thus more attractive to investors than that of Disney.

Additionally, Netflix has a comparative advantage of being a fast-mover compared to Disney. This is due to its production of original content, having a vibrant video streaming platform as well as offering rent-by-mail DVDs. In 2007,Netflix introduced its video streaming services to capitalize on multiplatform apps and higher internet. The idea was largely dismissed by traditional media companies but soon Netflix started increasing its subscribers. This has largely paid off for Netflix over the years.


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