Question

• RE: Netflix - Amazon - Disney
• Portfolio Overview
  • What is the current value of Netflix - Amazon - Disney Stocks? (Include "as of" date.)
  • What is your Netflix - Amazon - Disney Stocks rate of return? (Include "as of" date.)
  • Explain why Netflix - Amazon - Disney would be a good decision.to buy stocks I
  • Is my stock portfolio diversified?
• Convince your classmates that they should invest in your stock choices too.

Answer 1

Ans 1. The closing price of the three stocks are as follows

Stock	Closing Price as of 1st April 2019 in USD
Amazon	1,813
Netflix	364.4
Disney	112.22

Ans 2. The assumption is that all the stocks had been invested four years back in the year 2014 at the beginning of the year. The table has the prices for the end of the year and the beginning of the year from 2014 to 2018 along with its annual returns. For the year 2015 the Netflix had split of 7 is to 1

For the year 2019, across all the stocks the beginning price is the price as of January 2019 and the ending price is the closing price as of 1st April 2019. The change is the difference between the beginning price and closing price. The percentage return is the return from 2014 beginning price and the closing price in 2019

		Amazon
Year	Beginning Price	Ending Price	Change	Percentage Change
2014	398.79	310.35	-88.44	-22.18%
2015	310.35	675.89	365.54	117.78%
2016	675.89	749.87	73.98	10.95%
2017	749.87	1169.47	419.6	55.96%
2018	1169.47	1501.97	332.5	28.43%
2019	1501.97	1812.5	310.53	354.50%
		Netflix
Year	Beginning Price	Ending Price	Change	Percentage Change
2014	368.17	341.61	-26.56	-7.21%
2015	341.61	800.66*	459.05	134.38%
2016	114.38	123.8	9.42	8.24%
2017	123.8	191.96	68.16	55.06%
2018	191.96	267.66	75.7	39.44%
2019	267.66	365.51	97.85	0.72%
		Disney
Year	Beginning Price	Ending Price	Change	Percentage Change
2014	76.4	94.19	17.79	23.29%
2015	94.19	105.08	10.89	11.56%
2016	105.08	104.22	-0.86	-0.82%
2017	104.22	107.51	3.29	3.16%
2018	107.51	109.65	2.14	1.99%
2019	109.65	112.36	2.71	47%

Ans 3. The three stocks all are leaders in their sectors. It has to be evaluated differently

Netflix: It has been a disruptor and a game changer in the entertainment industry . It has created a new sector which has made the company to enjoy the first mover advantage. It has open the company to 257.3 million users which accounts for nearly 77% of the total cellphone users in USA alone. Being a first mover in this segment it has taken the advantage to expand into countries like India which is tipped to be one of the biggest smart phone user market in the world. This is visible from the fact that as per the Q4 2018 earnings the company's added 29 million paid subscribers in the entirety in the year. Out of this USA accounts for 1.9 million. Even as many companies has entered Netflix has the biggest share in this segment in USA and is creating its grip outside as well. If through USA which has been a big part of Netflix growth taken them to such success with new markets and new synergies they have a huge opportunity to increase the subscriber base and increase the revenue and their share.

Amazon: Amazon is the leader in e-commerce , it has started to diversify in other sectors as well. One of the upcoming sector is the video streaming sector where they are going to compete with Netflix. Amazon Prime has the biggest share coming from India. Its AWS has been the biggest contribution segment wise. The growth was showcased from the fact that the company reached $1 trillion in 2018 in the market cap. The company has strategised to diversify into different sectors one as mentioned is the video streaming, other being medical insurance where it is tied up with JP Morgan, Berkshire to provide medical insurance to the employees. Amazon launched into the grocery industry with its purchase of Whole Foods Markets. It is rounding out its hardware and logistics segments with last-mile deliveries, and it’s pushing forward in advertising to challenge Facebook and Google. These revenue drivers along with their ability to disrupt the market will surely impact the company and make its growth story even more successful.

Disney: Disney has a very diversified portfolio in the entertainment sector. With theme parks, a production house which has a lot of famous franchises under it, a successful cruise liner it has a very diversified and settled revenue stream. Taking the latest numbers of 2018 Media network contributed $6.14 billion the parks and resort has $4.88 billion, Studio entertainment offer $2.54 billion , the consumer product offered $1.54 billion . The company's television segment offers 42% revenue. The company has put in focus on the digital media and has planned to enter streaming business as well. Disney as a franchise had a very successful year with Star Wars, and Marvel Universe being the biggest success factor. With Toy Story coming the company will have a boost to its revenue as well.

Interesting to note all the three company's have recognised the streaming as the next big thing. Netflix being the trendsetter has been leading the market, and now Amazon and Disney with the acquisition of 21 Century Fox along with the announcement to launch their own streaming services is going to compete aggressively as well. Keeping all these stocks in the portfolio is going with the theme and the current trend. The composition will benefit as all of them compete. And Even if Netflix does not perform ( pertaining it has single source of revenue) the other two can be compensate with their other successful established sources which has been discussed to support the returns. The weightage of the shares will play a key role