Streaming stocks are on a tear, and it’s not just Netflix

Investors are familiar with Netflix dominating the streaming space, with its 100 percent gain just this year, but a handful of other names in its universe have surged in recent months.

Pandora, Roku and Spotify have surged 71 percent, 49 percent and 19 percent, respectively, in the last three months. Spotify is the youngest public company of the bunch, debuting in a direct listing in April.

These stocks have handily benefited from an economy flooded with subscription models, said Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management. The growing popularity of subscription services, particularly across media, has been key to these names’ success.

“They are essentially trading on the fact that they are growing their subscriptions. It really doesn’t matter how profitable they are; it almost doesn’t even matter how much revenue they have. It’s the subscription growth that really attracts them, because then it makes them a candidate for M&A for, probably, old media,” he said Thursday on CNBC’s “Trading Nation.”

“Until and unless their subscription growth rate slows down, I think it’s very dangerous to short them at this point. That’s the dynamic that’s really driving them, and that’s the dynamic that could push them even higher as we go from this point,” he added.

The charts of Spotify and Roku may be difficult to technically analyze given their relatively short lives as public companies, said Matt Maley, equity strategist at Miller Tabak, but shares of Pandora appear to have more room to run. Maley noted the stock’s overbought condition, but pointed out it’s come a long way from its 63 percent decline in 2017 alone.

“Although it’s overbought on a near-term basis and could pull back a little bit here, there are a lot of reasons to think this chart could have some more upside, at least after it takes a bit of a breather,” he said Thursday on “Trading Nation,” pointing specifically to a so-called island reversal, a traditionally bullish technical signal.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Sara Eisen

Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.

In March 2018, Eisen was named co-anchor of CNBC's "Power Lunch" (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.

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