In what has been a turbulent few months for the markets, a little glimmer of hope, akin to those found in their movies, arrives from the Walt Disney Co. NYSE: DIS. The media powerhouse has experienced share price increases over the past quarter which has added over 69 points to give the company a current price of 187.91 as of 12th February – up from 118.47 on 28th October.
So what can we attribute to this rise? Certainly not their theme parks, with California-based operations closed and Florida’s DisneyWorld open, but having seen a smaller, more cautious stream of customers since the gates have swung open. It is thought that revenue from the Disney division that controls the parks has been decimated, citing a $2.6m loss over the past year. This, however, they believe will change from April 2021 when vaccination rollouts pick up speed and their parks and movie theaters will again be able to open fully – hopefully in time for their latest Marvel movie Black Widow’s launch.
While COVID has caused issues for thrillseekers and movie-goers, the need to spend more time indoors has facilitated an increasing consumption of television and online media content. A Deloitte study reports that 80% of US residents now use at least one paid video subscription to consume their media. This is a 7% rise from the previous year and 11% from 2019.
Disney+ provides a way forward
Disney have opted to put their faith in their streaming site, Disney+ as a way of tapping into the VOD market. This is not without merit. The media brand was launched in November 2019 in the US, Canada and the Netherlands. It later expanded to include Europe and parts of the Asian-Pacific region and now has over 137m paid subscriptions worldwide. This shatters their previous target of obtaining 90m paid subscriptions by 2024. The target has since been amended and replaced with a more ambitious figure of 260m subscribers by the end of the fourth quarter, 2024. News of this amended target saw their stock price rise considerably.
Disney shares are still following an upward trend, with reports attributing their success to the imminent arrival of content from their newly formed brand Star which is launching in Europe, Canada and New Zealand. This fully-integrated content can be accessed using the Disney+ app in these countries offering content from other Disney-owned brands such as 20th Century Studios, FX and ABC. In Latin America, the Star brand is being launched as a standalone streaming service with thousands of hours of streaming content covering everything from general family entertainment to international and domestic sporting events.
Disney adjusted earnings currently sit at 32c a share. A very different view to the one of Wall Street, who estimated that they would experience an adjusted loss of 34c a share.