* Reports Wednesday, May 8, after the closure
* Revenue Expectation: $ 14.48B, EPS: $ 1.57
Walt Disney Co. (NYSE 🙂 shareholders have many reasons to be cheerful these days. Not only is the company’s existing company showing signs of strength, but the global entertainment giant is also building up a war chest and reinforcing itself to include rivals in the video streaming market.
In this environment of hope and growth, Disney releases Q2 2019 that investors expect will produce more bulls. In the short term, Disney has a big profit moment after its “Avengers: Endgame” edition has received a record-breaking reception worldwide
The film collected $ 1.22 billion in the last week of April and collected $ 357.1 million in the United States and Canada alone. The Marvel machine is a big success for Disney. The & # 39; Infinity War & # 39; According to S & P Global, last year made an estimated $ 985 million profit, including TV, toys and theater ticket sales.
Not much risk for Disney stock
The performance of the Endgame was so powerful that it forced many top walls in Wall Street to upgrade the shares of Disney and their 2019 profit expectations. This optimism is a good omen for Disney stocks, which achieved a return of 24% this year after a record high in April, much better than victories. The shares slid 1.2% yesterday, closing at $ 133.44, but have risen 16% last month alone.
Now that Disney’s underlying companies are showing growth and the launch of the Disney + streaming service in November is well underway, we see that the shares are not really risky after their powerful rally so far this year . We believe that the company will continue to benefit from its diversified franchise, which continues to offer good cash flow, even as the House of Mouse makes a huge shift in its business strategy
Disney had previously warned that fiscal 2019 would be a difficult year because the company is going through an internal transition after the acquisition of most of the 21st Century Fox, even if the program is developing for its flagship Disney + service to reclaim subscribers who have deconstructed to streaming providers such as Netflix (NASDAQ :).
Disney announced last month that Disney + will launch in the United States on November 12 for $ 6.99 a month – half the price of Netflix, which currently dominates the streaming market. It offers programming from Disney & # 39; s largest franchises, such as Star Wars and Marvel Studios, in addition to the new, original programming.
But that launch will not give Disney a direct boost to profit. Instead, these initiatives will escalate costs in the first few years and lower profits. The service is likely to have between 60 million and 90 million subscribers by the end of the 2024 financial year, the year in which the company expects to make a profit in this segment.
Bottom Line
Disney stocks, which are close to their record highs, reflect all of these positive expectations and hold their ground in a market that is vulnerable to a correction after significant gains in 2019 and amid increasing macroeconomic risk & # 39; s from the escalation of the trade war between the US and China. In this environment, we do not expect a major change in Disney stock when the company announces its Q2 earnings. But any potential weakness resulting from a negative profit surprise should provide a gateway for long-term investors who are still waiting on the sidelines.
