Disney (DIS) has been a stock market darling across the past six months. Disney’s stock was priced around $110 this past February. Today, the stock sells for $133.57.
Much of Disney’s recent success can be attributed to the merit of its movies. Disney has had one blockbuster hit after another in theaters across the globe. The company is also offering a streaming bundle that has Netflix executives quivering in fear. Will Disney return to its July high of $146, or will the stock plateau in the months ahead?
Let’s find out.
Disney’s Movie Success
It was not long ago when Disney was primarily known for cartoons and animated features. My, how times have changed…
Disney is now the box office king. The company’s decision to purchase the rights to the Star Wars franchise has paid off quite handsomely. However, Star Wars is not Disney’s sole box office hit. The company released five movies so far in 2019 that have hit 10-figure sales numbers. If the year finishes out as planned, Disney will have a total of seven flicks that hit the vaunted 10-figure mark at the box office.
Disney’s 2019 movie hits are highlighted by Toy Story 4 that reached a billion dollars in ticket sales, Avengers: Endgame, Captain Marvel, The Lion King, and Aladdin. Though Sony made the latest edition of Spider Man, Disney has its hands in this pie as well. Disney’s Marvel unit co-produced the uber-popular Spider Man film. All in all, Disney has raked in $7.67 billion from box office sales this year and there are still five months to go.
Disney’s Streaming Business
Disney is now letting its American customers bundle the company’s multitude of streaming services for under $13 per month. This is a direct shot at Netflix that has a good chance of proving successful.
Starting November 12, streamers will be able to tap into Hulu, ESPN+ and Disney+ for a mere $12.99 per month. This price matches that of Netflix’s mot successful price plan. However, the catch is Disney will subject its paying subscribers to advertisements.
Though Disney+ will not have ads, there is a chance the presence of ads on the other two channels will scare away some customers. After all, the average human being is inundated with advertisements throughout the majority of the day. However, there is talk that Netflix might also soon feature ads on its platform.
Customers who take the streaming route might be stuck with commercials regardless of the streaming service they select. Disney executives deserve credit for the timing of their new price plan announcement as Netflix’s brass recently acknowledged the fact that its increases in pricing has somewhat stifled subscriber growth. The fact that Disney’s streaming service has mass appeal for people of all ages just might be enough to convince some Netflix subscribers to make the transition to Disney.
Disney’s theme park attendance has tailed off in the most recent quarter. Though attendance at Disney parks is on the decline, there is no reason to panic as revenue stemming from theme park ticket sales has increased.
Disney customers certainly pay through the nose to visit the park yet they are still willing to spend plenty once inside. Merchandise and food sales spiked 10% in the latest quarter. The sales spike combined with the higher ticket prices and increased hotel occupancy have bolstered Disney’s bottom line.
In other words, there is no reason to panic about the decline in park attendance. The debut of Disney’s brand new theme park, Star Wars: Galaxy’s Edge, will certainly generate an abundance of interest.
Buy, Sell or Hold?
Buy or hold. Do not let a slight dip in theme park attendance scare you away from this stock. Disney is currently firing on all cylinders from movies to the streaming segment, theme parks and beyond. If you do not own Disney, you should give serious consideration to adding it to your portfolio and holding onto it for the long haul. Current Disney shareholders should not hesitate to hold onto their stock across posterity. Be patient and Disney will continue to thrive, adding that much value to your portfolio as time progresses.