Can Disney’s emphasis on streaming emulate the success of Netflix on Wall Street?

The 2020s have been an exceptionally volatile decade so far for Disney (NYSE: DIS). Following the post-pandemic rally, the entertainment stock has since shed 40% of its peak value of $197 recorded in March 2021, owing to a multitude of operational challenges. But recent signs of strength in the company’s streaming services could inspire more optimism in the stock. 

Following a decline of 10.94% over the first quarter of 2025, the stock launched a rip-roaring recovery in Q2, rallying nearly 27%. Now, after a period of relative stability, Disney is well-positioned to benefit from signs of strength in its Disney+ service, which is fast becoming a flagship product for the stock. 

Earnings miss triggers sell-off

The stock fell 4% on the announcement of its Q2 2025 earnings due to a revenue miss, despite signs of strength in the underlying figures for its Disney+ service.  

Total revenues for Disney came in at $23.65 billion, falling short of expectations of $23.73 billion for the quarter. 

The stock’s difficulty hitting revenue expectations undermined what was otherwise a strong quarter for earnings. 

Notably, net income reached $5.26 billion for Q2 2025, far surpassing the $2.62 billion reported over the same period last year. 

The company’s direct-to-consumer streaming segment gained $6.2 billion in revenue for a 6% year-over-year increase, despite Hotstar divesting from the service. Operating income for the segment also rallied to $346 million, which is made all the more impressive when considering it made a loss in Q2 2024. 

Broken down to earnings per share (EPS), Disney weighs in at $2.92, with earnings on an adjusted basis reaching $1.61 per share due to the company procuring Comcast’s final stake in streaming service Hulu.

Low P/E offers an opportunity

At a forward price-to-earnings (P/E) ratio of 20.19, Disney is not only cheaper than its streaming peers but is currently at one of its most affordable prices.

The current P/E of DIS is just a fraction of its 10-year and five-year averages of 45.71 and 50.56, respectively, and suggests that the stock has plenty of room to recover lost ground should it continue to build its market share in streaming markets. 

Although a P/E of 18.53 is high compared to entertainment stocks like Fox Corp (NASDAQ: FOXA) and Comcast (NASDAQ: CMCSA), which weigh in at 12.01 and 5.59, respectively, it’s becoming increasingly apparent that investors should value the company based on its streaming performance, putting Disney alongside peers like Netflix (NASDAQ: NFLX), which is one of the FAANG stocks, Warner Bros. Discovery (NASDAQ: WBD), and Spotify Technology (NASDAQ: SPOT). 

Disney has a unique litany of services, but it anticipates generating $1.3 billion of operating income from its direct-to-consumer streaming business in fiscal 2025, which highlights that Disney+ is fast becoming the stock’s focal point. 

There’s also plenty of evidence that Disney is aligning its platform with market leader Netflix in offering live sports coverage while broadening its range of on-demand services.

With a forward P/E ratio of 45.93, Netflix is a popular stock to aspire to, but Disney offers additional solidity in the form of its Experiences division, which posted a 27.7% operating margin in Q2 2025. 

This suggests that while Disney+ has a customer shortfall of approximately 170 million users on Netflix, despite adding 1.8 million on top of its 128 million total in the last quarter, the stock is well-supported through Disney’s broad range of operations. 

Furthermore, 2026 is expected to be a significant year for Disney. From major park renovations to potentially the biggest Marvel movie to date, 2026 could be a turning point for Disney.

Chasing Netflix’s market share

Disney’s direct-to-consumer streaming segment gained $6.2 billion in revenue for a 6% year-over-year increase, despite Hotstar divesting from the service. Operating income for the segment also rallied to $346 million, which is made all the more impressive when considering it made a loss in Q2 2024.

With the service undergoing a $2 price increase, subscriber growth for Disney+ is a strong indication of consumer faith in the service. 

There are also signs of support for the streaming service’s ad-supported tier, with 37% of active subscribers opting for the lower-cost plans and opening the door to greater advertising revenues for Disney. 

Disney closed its deal with Comcast to buy out NBCUniversal’s one-third stake in Hulu in June 2025, opening the door to fully combining the streaming service with Disney+. 

However, the full extent of Disney’s ambition to match Netflix for industry dominance can be seen in the recent launch of the company’s ESPN sports streaming service as an app. 

The move signifies a major step away from Disney’s relationship with legacy media and towards content streaming and live events. 

Available as a $29.99 per month service, Disney’s ESPN app will stream more than 47,000 live events annually. 

Incorporating live sports into Disney+ is an initiative that’s being replicated globally. For instance, in the United Kingdom and the Republic of Ireland, the platform recently brokered a deal with La Liga to stream Spanish soccer matches to subscribers. 

“Disney’s attention has turned to streaming live events, mirroring Netflix’s expansion into live streaming wrestling on its platform,” notes Steve Frauzel, Head of Market Insights at Just2Trade. 

Causes for concern

Although analysts have placed a median price target of $140 for Disney stock among market analysts, there are some signs that DIS could stay under pressure in 2025. 

In recent days, Comerica Bank opted to sell 9,758 shares of the stock, lowering its total holdings by 2.1% off the back of Disney’s mixed earnings. 

For a stock that’s experienced a volatile period in the wake of its post-pandemic rally, there are still signs that Disney isn’t out of the woods as far as its long-term Wall Street prospects are concerned. 

It’s clear that Disney+ and streaming services are the key to the stock’s future growth, but it’s important to pay close attention to Disney’s fundamentals. Signs of strain elsewhere could undermine the stock’s performance moving forward.