Entertainment giant Walt Disney Company (NYSE 🙂 shows investors it's worth waiting.
Shares of the global entertainment giant skyrocketed more than 13% Friday to close at $ 175.72, a record high. That's an amazing development at a time when the pandemic has remembered the Burbank, California-based company from its iconic theme parks, movie theaters and cruise lines.
Following this latest upward move, the DIS share is up more than 21% this year, beating the 13% expansion over the period. The stock closed at $ 169.30 on Monday, down 3.65% on that day.
Disney Annual Pass.
In the midst of one of the toughest periods in its corporate history, this remarkable turnaround should be a source of envy to entertainment executives struggling to survive when their cash flows have dried up and uncertainty about future eddies.
So, what makes Disney so attractive to own?
A clear distinction is the company's diversified business model and the strength of its brands. At a time when customers have left its theme parks and movie theaters, Disney is pushing ahead with its newly launched video streaming business, which many analysts believe is the future of entertainment.
The largest entertainment company in the world told investors last week that it plans to commission dozens of new movies and TV shows by increasing spending by as much as $ 16 billion a year by 2024. About 80% of the line-up is intended to provide more choices. for subscribers to the fast-growing streaming service Disney +.
In the coming years, Disney + plans to release approximately 10 Star Wars series and 10 Marvel series movies, as well as 15 Disney live action, Disney Animation and Pixar series, as well as 15 Disney live action, Disney Animation and Pixar Characteristics. And that's in addition to the premium content that will premiere in theaters or on linear channels before it comes to the streaming service.
260 Million Subscribers
These new titles are part of Disney's plans to increase subscriber numbers to between 230 million and 260 million by 2024. In addition, it wants to increase the cost of the service by $ 1 to $ 7.99 per month.
Investors loved this new direction, which could challenge the streaming leader, Netflix's (NASDAQ 🙂 dominance, and greatly boost Disney's sales once the traditional business is revived in a post -pandemic economy.
According to a Morgan Stanley estimate, Disney could complete FY24 with over 300 million streaming subscribers and $ 35 billion in new revenue channel, making streaming its largest venture.
Needham analyst Lauren Martin said in a note to customers that Disney has already surpassed Netflix as a leader in streaming video.
“Even starting with the hypothesis that NFLX's content is better than DIS's (which DIS investors would dispute), DIS's marketing decisions and innovations make it look like NFLX is down, given the SVOD ( subscription video on demand). tier from $ 9- $ 18 / month, ”he said, praising Disney's bundles that let subscribers choose combinations of their streaming services at different price ranges.
Goldman Sachs, which has a buy rating on the stock and has raised its price target from $ 157 to $ 200, said it generates much stronger earnings. In a note, the bank told investors:
“Our higher price target reflects a material increase in our long-term forecasts for DIS & # 39; s direct-to-consumer subscribers and revenues as we take into account the company's recently unveiled Star offering and higher prices for Disney +. "
Bottom Line
While Disney is suffering from the global health crisis that has left its parks and cinemas, investors are confident that the company will come back strongly as the streaming business becomes the fastest growing segment. These sentiments are pushing stocks up and prompting analysts to raise price targets.
