During the pandemic, streaming services (and other at-home companies) did really well. It’s no surprise that you’d be interesting in finding out how to invest in them.
And of the streaming services, Hulu is one of the most popular streaming services on the market. It’s growing in popularity as consumers look for alternatives to the high and rising cost of cable services.
The growing interest in Hulu might make buying its stock seem like a winning proposition, but there’s no way to buy it outright. That said, there are a couple of ways to leverage the Hulu surge.
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What Is Hulu?
As of January 1, 2022, Hulu had 45.3 million users, making it one of the most extensive streaming services in the industry. Founded in 2007, Hulu offers a library of popular full-length movies and TV series from major networks and original programming.
Hulu began as a joint venture between News Corporation, NBC Universal, and Providence Equity Partners. By April 2009, the Walt Disney Company joined the group as a stakeholder. The plan was to offer content from ABC, ESPN, and the Disney Channel.
Various other large corporations participated in ownership of the company, at least periodically. Hulu was even slated for an initial public offering (IPO) in 2010. However, that IPO never went through, and the company remained a subsidiary of other companies.
It offers an attractive alternative to regular cable TV services because it offers much of the same programming. For example, it offers shows from A&E, Bravo, E!, Fox Sports 1 & 2, FX, PBS, NFL Network, Oxygen, SyFy, USA Network, NBCSN, and many other networks.
The company continues to expand its product menu, providing a progressively higher service level to its customers.
The Hulu Financial Advantage
According to data on cable TV packages released in 2020 by the organization, DecisionData.org, the average household cable package is $217.42 per month. And that was in 2020!
As the report indicated – and most consumers readily understand – the average household cable package cost increases each year.
What makes this information even more remarkable is that the average household is paying more for their cable package than for the combination of all other utilities, including electricity, gas, water, sewage, and garbage. Collectively, those utility costs total an average of $205.50 per month.
Now that $217.42 average covers a lot more than cable TV. First, it includes Internet service, though that’s not usually the majority of the payment. Second, while you may get a basic cable service for around $40 per month or expanded for about $80, the add-ons run up the bill.
Two examples are renting modems and other equipment from the cable company, which can run between $50 and $80 per month – the other is premium packages. Consumers often select the basic package, then choose additional preferred channels on an à la carte basis. Additional channels can easily double or triple the base cost of the service.
Creating the right cable package is like navigating a matrix, and many consumers are no longer willing to endure that complication or the high prices.
What Hulu Offers Consumers
Streaming services, like Hulu, have become the go-to strategy that allows consumers to fight back against the big cable companies.
For example, Hulu offers three different plans that are substantially lower in cost than traditional cable plans:
- Hulu, at $6.99 per month, with a 30-day free trial.
- Hulu (No Ads), a $12.99 per month, with a 30-day free trial.
- Hulu + Live TV, at $69.99 per month with access to more than 75 top channels and no cable required.
Hulu + Live TV also comes with Disney+ and live sports with ESPN+. Of course, you’ll need an Internet connection. But unlike many programs offered by cable companies, you have more control over your monthly TV and internet costs.
Why Should You Own Hulu Stock?
Given the relentless increase in the cost of cable TV packages and Hulu’s steady growth, owning Hulu stock makes sense.
There’s just one problem – Hulu is not an independent company that issues its stock on major exchanges.
The Walt Disney Company and Comcast own Hulu in a partnership. Disney currently owns 67% of the stock, while Comcast owns 33%, though the ownership mix is scheduled to change.
According to an agreement between the two companies, Disney will purchase Comcast’s 33% share, giving them 100% ownership of the company. It’s assumed this will happen by January 2024. However, given that the transition is nearly two years away, it isn’t guaranteed.
Hulu Stock Performance
Since Hulu doesn’t offer stock to trade, the only way to play the company is through either Disney or Comcast. Neither is the direct play on Hulu, but each can allow you to participate in the company’s performance.
Unfortunately, neither company has turned in a stellar performance in recent years.
Disney traded at about $113 on April 14, 2017. As of April 8, 2022, the stock closed for just under $132. That represents a total five-year gain of about 16.8%.
But the one-year performance is even worse. On April 8, 2021, Disney’s stock traded at $187, while the drop to the current price of $132 represents a decline of $52, or 29.5%.
The performance situation is only slightly better with Comcast. In April 2017, the stock traded at about $38 per share. As of April 8, 2022, the stock closed just over $47. That represents a gain of $9 over five years, for a cumulative return of approximately 23.6%.
Over the most recent year, Comcast’s stock has declined. The fall from $53 on April 8, 2021, to the current price of $47 represents a decline of nearly 11.3% in the past year.
How to Invest in Hulu Stock
Stocks rise and fall, so could Disney and Comcast’s recent performance indicate a potential upturn in the future? Possibly, but no one can guarantee the outcome.
The entertainment industry is highly saturated, restricting future growth more than in the past few years. Disney looks like the better Hulu play between the two since it will likely hold 100% interest in the company by 2024.
If you’re looking to profit from Hulu through Comcast, it’s a bet that the deal to transfer their interest to Disney won’t happen, and is purely speculative.
If you want to invest in Hulu through stocks in Disney or Comcast, you can do so through popular investment brokers.
Ally Invest offers online, self-directed trading, complete with commission-free trades of stocks, exchange-traded funds (ETFs), and options (though options do come with a $0.50 fee per contract). You can purchase Disney or Comcast stock on the platform and thousands of other securities. You can open an account with no money and begin trading as you add funds to your account.
SoFi Active Investor Account enables you to engage in self-directed trading with a minimum initial investment of $100. They offer commission-free trading of individual stocks and ETFs. And if you’re also a cryptocurrency investor, SoFi is an excellent choice to hold crypto on the same platform as stocks and other securities. SoFi is also a highly diversified financial services platform, providing lending, insurance, and financial advice.
J.P. Morgan Self-Directed Investing is part of the J.P. Morgan Chase organization, the largest bank in America. They offer commission-free trades on stocks, ETFs, and options. Through July 14, 2022, the company is paying a bonus of up to $625 when you open a new account and fund it within 45 days. The bonus amount is based on a deposit of between 25,000 and $250,000+.
The Bottom Line on Hulu Stock
As you can see, there’s currently no way to invest directly in Hulu stock, despite the growing popularity of the service. Your options will be limited to Disney or Comcast stock.
But if you want a more direct play on a successful streaming service, consider Netflix. It’s one of the five FAANG stocks, and its stock price has more than doubled over the past five years (though it’s taken a severe dive in the most recent year). But Netflix is a much larger streaming service than Hulu, with more than 75 million subscribers in the US and Canada and over 220 million worldwide.
Otherwise, the only real option to make a direct play on Hulu is to bide your time and hold out for the company to be spun off from Disney after it becomes 100% owner of the company almost two years from now.