Tuesday marked another interesting day in U.S. equities. Investors saw good, bad and ugly in the stock market today, with assets mixed for the second straight session. Worth noting in this case though, the stark differences weren’t as notable as Monday’s session.
Again though, we saw small caps outperform via the iShares Russell 2000 ETF (NYSEARCA:IWM) as it rallied 1.24%, while tech lagged as the PowerShares QQQ ETF (NASDAQ:QQQ) fell 0.3%.
Sandwiched in between were the SPDR S&P 500 ETF (NYSEARCA:SPY) and SPDR Dow Jones Industrial Average (NYSEARCA:DIA), which were down 0.04% and up 0.2%, respectively.
While we saw small caps easily outperform the S&P 500 on Monday, we also saw high-growth tech stocks like Twilio (NYSE:TWLO), Shopify (NASDAQ:SHOP) and others obliterated on the day. On Tuesday, we saw more selling pressure in these names, although not to the extent we did in the prior session.
Instead, streaming dominated the headlines in the stock market today, following the Apple (NASDAQ:AAPL) event.
All About Apple
Just like it does every year, Apple held its fall product event on Tuesday, showcasing a number of new services, products and upgrades for its customers. What were the highlights?
Starting with the iPhone, Apple announced three new versions of the device. The iPhone 11 Pro and 11 Pro Max will start at $999 and $1099, respectively, and sport panel sizes of 5.8 inches and 6.5 inches, respectively.
The devices will come in four colors, have OLED displays and boast three rear-facing cameras. The iPhones will ship with a fast-changing adapter, while the iPhone 11 Pro has improved battery life of four hours and iPhone 11 Pro Max sports an improvement of five hours.
The third device is Apple’s low-cost option, the iPhone 11, weighing in at $699. The iPhone sports a 6.1-inch display and dual rear-facing camera. The low-cost option will be available in six colors.
Customers will also be able to order the new Series 5 Apple Watch. The device starts at $399, with a 4G unit costing $499. The Series 3 price will drop down $199. Apple also introduced the 7th-generation iPad, which starts at $329 and will begin shipping at the end of the month.
Further, the company announced that Apple Arcade will be available Sept. 19 in more than 150 countries. The service starts at $4.99 per month for the whole family (after a one-month free trial), and will soon have more than 100 games.
Finally, the company said that its Apple TV+ service will start at just $4.99 for the whole family. One year of the service will be included for new hardware purchases, with the first shows launching Nov. 1 in over 100 countries. Apple expects to add new shows each month.
Streaming Wars
I left the Apple TV+ news for last, because it has more than just customers talking about it. It’s wreaking havoc on other streaming plays, like Disney (NYSE:DIS), Netflix (NASDAQ:NFLX) and Roku (NASDAQ:ROKU).
Disney and Netflix each slipped about 2.2%, while Roku took a punch to the teeth, falling 10.5%. It’s exactly why all three stocks (plus Apple) were InvestorPlace’s Top Stock Trades.
What will the impact be?
When Disney priced its Disney+ streaming service at $6.99 per month (or $70 annually), most assumed it was to undercut Netflix. Given Disney’s strong content library and appeal to parents, the service looks like a layup at these prices.
But after Apple announced its service at $4.99 a month, perhaps that’s why Disney’s price came in so low. While it doesn’t mean he knew ahead of time, the fact that Disney CEO Bob Iger sits on the Apple board is at least worth mentioning here.
In any regard, I don’t know that Disney is at a big competitive risk against Apple. For starters, the price points are not that far apart, particularly if customers buy the annual package from Disney (which boils down to $5.83 per month). Second, Disney has vastly better content than Apple that appeals to toddlers, kids, teens and adults.
That’s hard to top.
For Netflix though, its standard plan rings in at $12.99 a month, but its offerings range between $8.99 and $15.99 per month. Many would argue that it has inferior content to Disney, but will likely have superior content to Apple. Unfortunately, its price point isn’t competitive. It will be interesting to see how much staying power NFLX really has and how loyal its customers really are.
Perhaps it won’t lose market share and in fact, gain market share as more customers cut the cord. Collectively, someone could pay $25 a month for NFLX (standard), Disney+ and Apple TV+. Not bad.
Let’s see what the market makes of it over the next few days and weeks.
Finally, there’s Roku. Shares were crushed on the day, which likely had more to do with its run from under $100 to over $175 in about a month’s time more than anything else. Still, the headlines about Apple’s approach to streaming — of course, with its own hardware available — didn’t help matters.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long AAPL, DIS and SHOP.