Shares of streaming media giant Netflix, Inc. (NASDAQ:NFLX) were on the rise again today, extending Monday’s takeover rumor-fueled rally.
Unsubstantiated rumors began circulating on Wall Street yesterday that entertainment giant Disney (NYSE:DIS) was exploring a possible takeover. Those reports popped NFLX shares more than 4% on the day.
The gains are only continuing today, as analysts begin to weigh in on the M&A implications of a DIS/NFLX mash-up.
R.W. Baird analyst William Power acknowledged the takeover chatter, and said in a note to clients that “whether Disney, Apple or someone else, Netflix could become a target.” NFLX would make sense for DIS from a content distribution standpoint, since Disney owns a massive library of TV shows and movies — including blockbusters from Marvel, LucasFilm, and Pixar.
Given that fact that it also owns “the worldwide leader in sports” ESPN, Disney could also in the future look to leverage Netflix as a live streaming platform for its sports content.
These takeover rumors are nothing new for Netflix, which has been the subject of similar M&A gossip since well before before it became a public company back in 2002. Similar to Twitter (NYSE:TWTR), the ultimate answer for the two new media companies with stalled user growth could simply be to sell to a larger entity that can leverage its existing user base and find new ways to generate additional revenue streams.
Netflix shares rose $1.44 (+1.40%) to $104.07 in Tuesday morning trading. Year-to-date, NFLX has fallen 9.34%, compared to a 5.96% rise in the benchmark S&P 500 in the same period.