Among disruptive and emerging technologies, count streaming entertainment as one that’s benefiting the slew of stay at home orders Americans are dealing with as a result of the coronavirus. As has been widely noted, that’s been a boon for Netflix (NASDAQ: NFLX), among others.
Investors looking to play the streaming boom via ETFs may want to consider the ARK Web x.0 ETF (NYSEArca: ARKW), an actively managed fund that by virtue of that active management can more adequately capitalize on streaming than some rival passive ETFs.
ARKW components “are focused on and expected to benefit from shifting the bases of technology infrastructure to the cloud, enabling mobile, new and local services, such as companies that rely on or benefit from the increased use of shared technology, infrastructure and services, internet-based products and services, new payment methods, big data, the internet of things, and social distribution and media,” according to ARK Invest.
Netflix and Chill With ARKW
What makes ARKW a more compelling option than passively managed funds is that with the benefit of active management, the fund goes beyond prosaic fares, such as Alphabet, Amazon, and Facebook. For example, Tesla is ARKW’s top holding, and the fund features exposure to the likes of Square and Roku, stocks not often found for size in traditional internet ETFs. Roku is another streaming name as the leader in the OTT space.
“We believe Netflix understands the difference between active and passive viewing better than any other content company,” said ARK analyst Nicholas Grous in a recent note. “Except for its transition from DVD rentals to on-demand video streaming, we believe the most ambitious and important strategic move Netflix has made was into original content.”
Netflix still faces competition from up and coming rivals. WarnerMedia announced the name for its upcoming streaming service recently, HBO Max, and confirmed it will be the new home for the beloved NBC sitcom “Friends” along with new original programming. This means Netflix will lose the Emmy-winning comedy series come spring 2020.
As an industry, streaming is still in its formative stages and is on the cusp of potentially exponential growth over the next several years. ARK notes that content matters, but quality often does not while pointing out that no one can compete with Netflix in terms of matching viewers to the content they desire.
“More important than the quantity of content streamed is the ability to match them with viewers,” said Grous. “Again, no other service appears to compare to Netflix in concentrating viewership with the right shows.”
For more on disruptive technologies, visit our Disruptive Technology Channel.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.