The Walt Disney Company (DIS 1.05%) has been a gem over the years. The company has a seemingly unstoppable ability to dominate every facet of the entertainment industry. Walt Disney would probably be astounded at the technological leaps that have provided Disney with new areas of growth these days. Even in the wake of the COVID-19 pandemic that shut down its theme parks and shuttered movie theaters, Disney stock carries appeal. Now swinging big in the streaming industry, Disney is pressing into the newest area of consumer entertainment. In its fourth-quarter and full-year earnings release, Disney reported revenue increases of 9% and 23%, respectively.
Disney is gearing up for a proxy battle at its annual shareholder meeting this spring. The character of Mickey Mouse has (somewhat) entered the public domain. Its movie studios have had to postpone at least three theatrical releases that the company had been counting on to premiere in 2024 as a result of the now-concluded Hollywood https://traderoom.info/ strikes. He’s also written for Esquire magazine’s Dubious Achievements Awards. Indeed, DIS stock has lost 60% of its value since its peak, shedding roughly $220 billion in market cap in the process. To put such a sum in context, $220 billion is more than the entire market values of Dow stocks McDonald’s (MCD) or Salesforce (CRM).
- Let’s see why it could be time for an open house for the House of Mouse.
- A company’s market capitalization calculates the total market value of all outstanding stock at current market prices.
- Until his appointment as CEO on Feb. 25, 2020, Chapek spent nearly three decades at Disney, heading the company’s theme parks unit from 2015.
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A month later, Disney stock price dropped below $30, which was a year to date low. However from that point Disney, like many Dow 30 members, was part of a huge run up over the next 3 years. Disney stock price broke $50 in 2013, the stock price hit $75 a year later and then finally smashed the $100 ceiling in 2015. Disney’s IPO pricing for the original OTC stock was $5 per share back in 1946. Investing $5,000 would have netted you 1,000 shares of the company. The important thing to take into account here is that the stock has split multiple times through its existence.
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A proxy battle isn’t necessarily bad for investors, especially if it pushes the company into working harder to achieve financial objectives. The entertainment titan has come to rely on Disney+ to fuel its revenue growth, particularly with the pandemic still weighing on its parks and resorts business. Therefore, I would warmly recommend buying Disney shares despite the sky-high price-to-earnings ratio. Those inflexible metrics are coming back to earth over time as Disney continues its recovery and tackles the media-streaming market like only a massive mouse in red shorts and yellow shoes can. The stock is trading at lofty valuation ratios such as 283 times trailing earnings and 228 times free cash flows. Surely that’s too rich, even for a media titan with nearly a hundred years of history and its eyes on an increasingly digital entertainment market.
Hulu Joins Streaming Giants Netflix, Disney+ And YouTube In Password Sharing Crackdown
In the most recent earnings call, Iger said shifting ESPN to streaming is “not a matter of if but when.” At the same time, Disney also is considering strategic partnerships for the network. Disney’s TV networks represent about 30% of the company’s overall revenue, so the direction the company takes with ESPN or other TV assets could be critical. The media network component also includes the Disney Channel, one of two dominant cable networks for children, which allows the firm to introduce and extend its strong content portfolio. With its 2019 purchase of the Fox entertainment assets, Disney enhanced its pay TV lineup by adding multiple channels with strong appeal to adults. FX and FXX are homes for critically acclaimed original scripted shows.
The History of Disney’s Stock Price by Markets Insider
Disney has mastered the process of monetizing its world-renowned characters and franchises. The company has moved beyond the historical view of a brand that children recognize and parents trust by acquiring and creating new franchises and intellectual property. Recent successes with Pixar and Marvel have helped create new opportunities for adults who may have outgrown their attraction to the company’s traditional characters. The 2012 acquisition of Lucasfilm added another avenue to engage with children and adults. Each new franchise deepens the Disney library, which should continue to generate value over the years.
It will need to start winning again at the box office, but it doesn’t have a potential blockbuster in its arsenal until Memorial Day weekend. Thankfully, Disney doesn’t need to be firing on all cylinders to get back above $100 again. A strong financial update with a convincing case for its near-term performance should be enough. The market already knows how Disney struck out at the multiplex, but there’s anecdotal evidence that Disney World did see more than just a seasonal uptick in activity over the holidays. The real blowout here would likely come from the bottom line, especially if Disney’s direct-to-consumer streaming business takes another big jump on the path to eventual profitability. Immediately, Iger restructured management to offer creative teams more power to see their projects through.
Disney shares are depressed because the market isn’t impressed. Reshaping investor perspective is a tall order, but you’re also talking about a master storyteller at work here, and I think Disney could change the narrative. I’ll see you at the other end of this year to see if I was right. The result of that underperformance is that Disney stock now trades at less than half the price it peaked at 35 months ago.
A company’s market capitalization calculates the total market value of all outstanding stock at current market prices. Market cap is one way of estimating how much a company is worth. For example, a company with one million outstanding shares trading at $50 would have a market cap of $50 million. The analysts’ consensus is that revenue will climb by less than 4% this fiscal year — a low bar if the economy plays nice.
Going off of a June 11 price of $116.59 per share, that initial $5,000 investment is now worth a whopping $89,541,120. A surprisingly robust report on theme park attendance there. A shower of pixie dust that ends with a promising divestiture or partnership that no one saw coming. There are a lot of ways for Disney to keep January’s gains going.
The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Have a look at the above chart and you’ll see that if you put $1,000 into Disney stock 20 years ago, today it would be worth $4,527. The same amount invested in the S&P 500 would theoretically be worth $5,968 today. Shareholders in Walt Disney (DIS) probably wish they were celebrating the media and entertainment conglomerate’s 100th anniversary under happier circumstances.
Prices have generally followed the broader market’s daily trends, amplified by the business promise investors see in a post-coronavirus entertainment industry. Curiously, Disney’s earnings reports have broken that connection all year long — and not in a positive way, for the most part. Disney has also trounced Wall Street profit targets in back-to-back quarters, including a 17% beat last time out.
With Disney, it pays to look at the big picture through time. Yes, 2020 is not a year for the record books — at least not in a good way. For the next decade, though, Disney still seems well-positioned. Online trading212 broker content is going to be the battleground in the entertainment industry; there’s no getting around that. Disney has prepared itself well through acquiring strong assets and building out its own Disney+ service.
Until his appointment as CEO on Feb. 25, 2020, Chapek spent nearly three decades at Disney, heading the company’s theme parks unit from 2015. In that role, Chapek dramatically expanded the company’s parks and related offerings, launching the Shanghai Disney Resort and nearly doubling the Disney Cruise Line fleet. In 1967, Florida legislators created a special taxing district called the Reedy Creek Improvement District, for the site of the Disney World amusement park.
At the top, Disney boasted a market capitalization of more than $366 billion. This is an important time for the media stock bellwether, and not just because activists are taking a battering ram to the castle. A lot of its fellow media companies are stumbling in transitioning from cable TV fixtures to premium streaming leaders.