Is FAANG getting GAAF’D?

2019-11-14 | TG Watkins

FAANG was the acronym created from the powerhouse stocks that lead the way for many years as they grew to huge significance in the market. It was a catchy term that helped seat them in our brains and, with a fierce term like that, probably helped them grow on aura alone.

One thing we reliably count on in life is change, and the market is no different. While some are excited by the constant of change, others may be saddened that such change will affect the things we have grown fond of, such as acronyms like FAANG.

There is a new player in the land of streaming media and it ain’t no David, but it does start with a D. Disney just rolled out their Disney Plus service which is looking to take away market share from both HBO and Netflix. In fact, they are so eager to get people on board that they will be taking losses for the first few years just to swipe subscribers out from underneath their competitors.

Disney Plus will start at $7 a month, or $70 if you pay the year up front ($5.83/mo) which is half of HBO and a discount to Netflix’s $9 tier. But price isn’t the whole story. Disney will allow 4 simultaneous streams, 4K HD in Dolby Vision, HDR10, and Dolby Atmos immersive audio. This puts Disney’s $7-a-month subscription closer in comparison with Netflix’s $16-a-month tier.

I did a segment this morning on Yahoo Finance TV discussing these threats to Netflix so be sure to take a look at it here:

As far as the stock goes, DIS has been on a winning streak for years. And more recently, price has just pulled back to excellent long-term support of the Monthly 10 SMA, Weekly 50 SMA, and Daily 200 SMA. All key levels that I love to see price respect. Now that earnings are out of the way and warmly received, as noted by the pop in price, I think DIS is an excellent buy.

Personally, the way I handle a pop like this is to wait for price to come down to support of the hourly 50 SMA. Then further in the future I like to see price find the daily 50 SMA for support. Both of these are general areas I am willing to wait for to pick up shares.

While DIS has been accelerating, NFLX has been wallowing. So, will DIS join the FAANG team or is DIS in the process creating a new acronym that we will smirk at to NFLX’s dismay: GAAF’D