Walt Disney
Re: Walt Disney
Stocks Fall Monday On Interest Rate Concerns
Michael M. Santiago
The Walt Disney Company (NYSE:DIS) is reportedly exploring options to sell or find a joint venture partner for its India digital and TV business, reflecting the company's ongoing strategic evaluation of its operations in the region. The talks are still in the early stages, with no specific buyer or partner identified yet. The outcome and direction of the process remain uncertain. Internally, discussions have commenced within Disney's headquarters in the United States as executives deliberate on the most viable course of action. These deliberations signify the company's willingness to adapt and optimize its business operations to align with changing market dynamics. The Wall Street Journal reported on July 11 that Disney had engaged with at least one bank to explore potential avenues for assisting the growth of its India business while sharing the associated costs. This approach suggests a proactive stance by the company to explore partnerships or arrangements that can drive growth while minimizing financial burdens. While it is too early to ascertain the exact direction this exploration will take, the developments in Disney's India business warrant attention, as they may shape the future landscape of the company's presence in this all-important region."
Bron: https://seekingalpha.com/article/4617725-disney-major-changes-are-coming
Michael M. Santiago
The Walt Disney Company (NYSE:DIS) is reportedly exploring options to sell or find a joint venture partner for its India digital and TV business, reflecting the company's ongoing strategic evaluation of its operations in the region. The talks are still in the early stages, with no specific buyer or partner identified yet. The outcome and direction of the process remain uncertain. Internally, discussions have commenced within Disney's headquarters in the United States as executives deliberate on the most viable course of action. These deliberations signify the company's willingness to adapt and optimize its business operations to align with changing market dynamics. The Wall Street Journal reported on July 11 that Disney had engaged with at least one bank to explore potential avenues for assisting the growth of its India business while sharing the associated costs. This approach suggests a proactive stance by the company to explore partnerships or arrangements that can drive growth while minimizing financial burdens. While it is too early to ascertain the exact direction this exploration will take, the developments in Disney's India business warrant attention, as they may shape the future landscape of the company's presence in this all-important region."
Bron: https://seekingalpha.com/article/4617725-disney-major-changes-are-coming
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Re: Walt Disney
Disney: Sentiment Shift For Limited Time
Aug. 11, 2023 12:20 PM ETThe Walt Disney Company (DIS)PENN
Summary
Disney's stock is expected to rally in the short term due to the Penn Gaming deal and bouncing off the $85 support level.
Disney's streaming business is struggling, with declining subscribers for the key ESPN+ service.
The stock trades at 17x aggressive FY24 EPS targets, providing limited upside on any rally.
After a horrible year, Walt Disney Company (NYSE:DIS) appears poised for a quick rally over the short term. The company has not resolved the problem in the streaming market with weak subscriber numbers and the Penn Gaming (PENN) deal amounts to a very small deal to enter the gaming sector. My investment thesis is now bullish on Disney for a quick trade before the really tough market of the last couple of years has led to a double bottom for the stock around $85.
Sentiment Shift
The stock rallied 5% following disappointing FQ2'23 numbers. The prime reason is likely Disney bouncing off $85 again and the Penn betting deal marks a key move into sports betting for ESPN.
The iconic sports brand will obtain $1.5 billion in cash payments over the next 10 years along with $500 million in warrants to buy Penn common shares at prices above $26. Penn gets the ESPN Bet trademark for their sports book in a move expected to drive traffic.
ESPN is the biggest brand in sports media with 370+ million social media followers and 100 million monthly digital unique users. However, the company is only getting $150 million per year to plug the ESPN Bet concept.
Since ESPN has to promote the ESPN Bet concept via odds attributions, digital product integrations and such, the deal is basically a marketing agreement for the sports brand. Analysts forecast Disney to produce nearly $90 billion in revenues this FY, so the Penn Gaming deal doesn't move the needle much.
The market is excited about the $500 million worth of warrants, but those are already worthless. Penn is trading at $25 with the strike price for the lowest warrant Tranche of ~12.7 million shares at $26.08.
Disney might have 31.8 million worth of warrants and the ability to earn another 6.3 million warrants for meeting performance targets, but the general strike price for all of these warrants are around $29. Penn needs to trade above $45 for Disney to actually make an additional $500 million off the deal.
Considering the deal with Barstool Sports failed so miserably, one needs to consider this deal with ESPN doesn't work out either. Penn paid $550 million for Barstool and sold the company back to Dave Portnoy for just $1.
Darren Rovell did a Twitter Poll on whether gamblers would use the ESPN Bet app due to promotions on ESPN and the poll was noticeably negative. ESPN has a loyal viewership due to sports rights, not necessarily opinions on sports or gambling. The poll showed only 12.8% of over 13K votes would absolutely use the ESPN Bet sportsbook due to the marketing ties.
Earnings Disaster
Along with the deal, Disney announced FQ3 results with revenues missing estimates by $200 million and only growing 4%. The DTC video streaming product remains a disaster with subscribers actually in decline now and Disney having to hike prices.
The ESPN+ product was supposed to be the future of the sports business and the subs actually declined from the prior quarter. Disney only collects an ARPU of $5.45 on the current 25.2 million subs, yet growth has already stalled.
While sentiment appears to have changed on the stock, Disney hasn't done anything impressive here. The June quarter EPS was down YoY to $1.04 and the consensus is for the media giant to earn just $5 in FY24.
The stock trades at nearly 17x those FY24 EPS targets and investors shouldn't have a ton of confidence in those numbers. Disney plans to hike subscription fees for Disney+ and Hulu, possibly leading to a spiraling sub loss.
The stock is very expensive considering the estimates require a nearly 34% boost in FY24 EPS targets to reach the 17x P/E multiple.
Takeaway
The key investor takeaway is that sentiment has shifted on Disney, at least in the short term. The stock is likely to rally with bullish sentiment from the Penn Gaming deal and the excitement from entering the sport betting business.
In reality, ESPN is just licensing the brand name without the company really benefiting from sports gambling. The Disney business continues to struggle with the future streaming subscription services starting to decline already.
The stock can probably rally back to 52-week highs before reality sets in that the business hasn't been transformed yet.
Bron: seekingalpha
Aug. 11, 2023 12:20 PM ETThe Walt Disney Company (DIS)PENN
Summary
Disney's stock is expected to rally in the short term due to the Penn Gaming deal and bouncing off the $85 support level.
Disney's streaming business is struggling, with declining subscribers for the key ESPN+ service.
The stock trades at 17x aggressive FY24 EPS targets, providing limited upside on any rally.
After a horrible year, Walt Disney Company (NYSE:DIS) appears poised for a quick rally over the short term. The company has not resolved the problem in the streaming market with weak subscriber numbers and the Penn Gaming (PENN) deal amounts to a very small deal to enter the gaming sector. My investment thesis is now bullish on Disney for a quick trade before the really tough market of the last couple of years has led to a double bottom for the stock around $85.
Sentiment Shift
The stock rallied 5% following disappointing FQ2'23 numbers. The prime reason is likely Disney bouncing off $85 again and the Penn betting deal marks a key move into sports betting for ESPN.
The iconic sports brand will obtain $1.5 billion in cash payments over the next 10 years along with $500 million in warrants to buy Penn common shares at prices above $26. Penn gets the ESPN Bet trademark for their sports book in a move expected to drive traffic.
ESPN is the biggest brand in sports media with 370+ million social media followers and 100 million monthly digital unique users. However, the company is only getting $150 million per year to plug the ESPN Bet concept.
Since ESPN has to promote the ESPN Bet concept via odds attributions, digital product integrations and such, the deal is basically a marketing agreement for the sports brand. Analysts forecast Disney to produce nearly $90 billion in revenues this FY, so the Penn Gaming deal doesn't move the needle much.
The market is excited about the $500 million worth of warrants, but those are already worthless. Penn is trading at $25 with the strike price for the lowest warrant Tranche of ~12.7 million shares at $26.08.
Disney might have 31.8 million worth of warrants and the ability to earn another 6.3 million warrants for meeting performance targets, but the general strike price for all of these warrants are around $29. Penn needs to trade above $45 for Disney to actually make an additional $500 million off the deal.
Considering the deal with Barstool Sports failed so miserably, one needs to consider this deal with ESPN doesn't work out either. Penn paid $550 million for Barstool and sold the company back to Dave Portnoy for just $1.
Darren Rovell did a Twitter Poll on whether gamblers would use the ESPN Bet app due to promotions on ESPN and the poll was noticeably negative. ESPN has a loyal viewership due to sports rights, not necessarily opinions on sports or gambling. The poll showed only 12.8% of over 13K votes would absolutely use the ESPN Bet sportsbook due to the marketing ties.
Earnings Disaster
Along with the deal, Disney announced FQ3 results with revenues missing estimates by $200 million and only growing 4%. The DTC video streaming product remains a disaster with subscribers actually in decline now and Disney having to hike prices.
The ESPN+ product was supposed to be the future of the sports business and the subs actually declined from the prior quarter. Disney only collects an ARPU of $5.45 on the current 25.2 million subs, yet growth has already stalled.
While sentiment appears to have changed on the stock, Disney hasn't done anything impressive here. The June quarter EPS was down YoY to $1.04 and the consensus is for the media giant to earn just $5 in FY24.
The stock trades at nearly 17x those FY24 EPS targets and investors shouldn't have a ton of confidence in those numbers. Disney plans to hike subscription fees for Disney+ and Hulu, possibly leading to a spiraling sub loss.
The stock is very expensive considering the estimates require a nearly 34% boost in FY24 EPS targets to reach the 17x P/E multiple.
Takeaway
The key investor takeaway is that sentiment has shifted on Disney, at least in the short term. The stock is likely to rally with bullish sentiment from the Penn Gaming deal and the excitement from entering the sport betting business.
In reality, ESPN is just licensing the brand name without the company really benefiting from sports gambling. The Disney business continues to struggle with the future streaming subscription services starting to decline already.
The stock can probably rally back to 52-week highs before reality sets in that the business hasn't been transformed yet.
Bron: seekingalpha
Buy and Hold blijft mijn strategie, tenzij een aandeel 20 percent gestegen is in een periode van enkele weken/maanden na aankoop.
Re: Walt Disney
In het tijdschrift Trends:
Met de lopende kostenbesparingen en de aangekondigde prijsstijgingen is er potentieel voor aanzienlijke winststijgingen.
De Walt Disney Company heeft zijn financiële resultaten over het derde kwartaal van het gebroken boekjaar 2023 bekendgemaakt. De evolutie van het aantal abonnees bij Disney+ stelde de markt teleur. Het aantal abonnementen is blijven steken op 146,1 miljoen, terwijl analisten een stijging naar 154,8 miljoen hadden verwacht. De voorspelde omzet voor het derde kwartaal was 22,51 miljard dollar, maar Disney rapporteerde een omzet die 198 miljoen dollar lager lag.
Desondanks maakte het aandeel Disney afgelopen donderdag een aanzienlijke sprong (+4,9%), waardoor het zelfs de grootste stijger in de S&P500-index was. Beleggers raakten overtuigd van Disney’s inspanningen om de winstgevendheid van het bedrijf te vergroten, in plaats van uitsluitend te focussen op maximale groei op de lange termijn.
Een jaar geleden leed Disney+ nog een verlies van een miljard dollar in Ă©Ă©n kwartaal, maar door streng kostenbeheer kon dat afgelopen kwartaal worden teruggebracht tot 512 miljoen. Bovendien kondigde Disney aan dat de prijzen voor de meeste Disney+-abonnementen met 27 procent zouden stijgen.
Er is speculatie ontstaan over een mogelijke overname van Disney door een groter bedrijf, zoals Apple. Tijdens een analistenbijeenkomst merkte CEO Bob Iger op dat speculaties daarover moeten worden afgewogen met de internationale regelgevende instanties in gedachten.
Conclusie
Disney blijft in de voorbeeldportefeuille. Met de lopende kostenbesparingen onder leiding van Iger en de aangekondigde prijsstijgingen, is er potentieel voor aanzienlijke winststijgingen. De verhouding tussen de omzet en de beurswaarde staat bovendien op het laagste niveau van het afgelopen decennium (1,8). Dat betekent dat Disney momenteel goedkoper wordt verhandeld dan tijdens de marktcrash van 2020 als gevolg de uitbraak van de covid-19-pandemie die Disney dwong de pretparken te sluiten. Dat is een kenmerk dat slechts weinig grote bedrijven kunnen claimen en het aandeel tot een belangrijke herstelkandidaat maken.
Advies: koopwaardig
Risico: gemiddeld
Rating: 1B
Koers: 86,35 dollar
Ticker: DIS US
ISIN-code: US2546871060
Markt: NYSE
Beurskapitalisatie: 157,78 miljard dollar
K/w 2022: 38
Verwachte k/w 2023: 30
Koersverschil 12 maanden: -24%
Koersverschil sinds jaarbegin: -4%
Bert liked last! Met de lopende kostenbesparingen en de aangekondigde prijsstijgingen is er potentieel voor aanzienlijke winststijgingen.
De Walt Disney Company heeft zijn financiële resultaten over het derde kwartaal van het gebroken boekjaar 2023 bekendgemaakt. De evolutie van het aantal abonnees bij Disney+ stelde de markt teleur. Het aantal abonnementen is blijven steken op 146,1 miljoen, terwijl analisten een stijging naar 154,8 miljoen hadden verwacht. De voorspelde omzet voor het derde kwartaal was 22,51 miljard dollar, maar Disney rapporteerde een omzet die 198 miljoen dollar lager lag.
Desondanks maakte het aandeel Disney afgelopen donderdag een aanzienlijke sprong (+4,9%), waardoor het zelfs de grootste stijger in de S&P500-index was. Beleggers raakten overtuigd van Disney’s inspanningen om de winstgevendheid van het bedrijf te vergroten, in plaats van uitsluitend te focussen op maximale groei op de lange termijn.
Een jaar geleden leed Disney+ nog een verlies van een miljard dollar in Ă©Ă©n kwartaal, maar door streng kostenbeheer kon dat afgelopen kwartaal worden teruggebracht tot 512 miljoen. Bovendien kondigde Disney aan dat de prijzen voor de meeste Disney+-abonnementen met 27 procent zouden stijgen.
Er is speculatie ontstaan over een mogelijke overname van Disney door een groter bedrijf, zoals Apple. Tijdens een analistenbijeenkomst merkte CEO Bob Iger op dat speculaties daarover moeten worden afgewogen met de internationale regelgevende instanties in gedachten.
Conclusie
Disney blijft in de voorbeeldportefeuille. Met de lopende kostenbesparingen onder leiding van Iger en de aangekondigde prijsstijgingen, is er potentieel voor aanzienlijke winststijgingen. De verhouding tussen de omzet en de beurswaarde staat bovendien op het laagste niveau van het afgelopen decennium (1,8). Dat betekent dat Disney momenteel goedkoper wordt verhandeld dan tijdens de marktcrash van 2020 als gevolg de uitbraak van de covid-19-pandemie die Disney dwong de pretparken te sluiten. Dat is een kenmerk dat slechts weinig grote bedrijven kunnen claimen en het aandeel tot een belangrijke herstelkandidaat maken.
Advies: koopwaardig
Risico: gemiddeld
Rating: 1B
Koers: 86,35 dollar
Ticker: DIS US
ISIN-code: US2546871060
Markt: NYSE
Beurskapitalisatie: 157,78 miljard dollar
K/w 2022: 38
Verwachte k/w 2023: 30
Koersverschil 12 maanden: -24%
Koersverschil sinds jaarbegin: -4%
Buy and Hold blijft mijn strategie, tenzij een aandeel 20 percent gestegen is in een periode van enkele weken/maanden na aankoop.
Re: Walt Disney
Een meer pessimistische kijk echter:
"
Disney: How Good Is It At The Nine-Year Low?
Aug. 27, 2023 10:54 PM ETThe Walt Disney Company (DIS)6 Comments
Summary
Disney's shares have hit a nine-year low, trading almost 60% below the all-time high.
The company's recent performance has been uneven, with declining profits and anemic growth in its media and entertainment segment.
Disney may explore a potential deal with Amazon to better monetize its ESPN asset.
However, the company's valuation is still high considering its problems.
Article Thesis
Disney (NYSE:DIS) has seen its shares slump to a nine-year low, which is why it makes sense to take another look at the company. While the valuation has come down, it is not especially low, and due to the many problems and issues Disney faces, I continue to stay on the sidelines for now.
What Happened?
Disney's shares have hit a new 9-year low last week, with shares trading at $83 at the time of writing. Shares have now slumped massively compared to where they traded just a couple of years ago:
Disney's shares are now trading almost 60% below the all-time high, while the company's enterprise value, which accounts for Disney's market capitalization and its debt, has declined a little less. Still, even Disney's EV is down quite a lot, suggesting it was way too high in the first place when there was a lot of hype about Disney's streaming service during the pandemic -- shares peaked in early 2021.
Since then, optimism about Disney's streaming service has waned, financial conditions have become tighter, resulting in valuation compression for many stocks due to higher discount rates, while Disney also had some operational issues.
Disney's Recent Performance
Disney reported its most recent quarterly earnings results earlier in August. The company missed revenue estimates and saw its sales grow by a meager 3.9%, while the company managed to beat earnings per share estimates. Still, earnings per share were down versus the previous year's quarter, dropping from $1.09 to $1.03 after backing out one-time items. Declining profits are, of course, bad, and considering that Disney is not trading at a low valuation, the market and investors weren't happy with the meager sales growth and declining profitability.
The performance across Disney's different business units has been very uneven in the recent past. The company's parks and resorts business, which is capital-intensive but where it has a huge moat, has been performing very well so far in 2023. The unit generated sales growth of 13% during the most recent quarter, relative to the previous year's quarter. That was the best growth rate among all Disney business units. Even better, the unit is highly profitable, generating an operating income of $2.4 billion with an attractive 29% operating margin. In contrast, the remainder of Disney grew a lot less and generated an operating income margin of just 8%, which can hardly be described as attractive. The compelling revenue growth in the parks business was partially driven by substantial price increases -- that works well so far, but it remains to be seen whether Disney will be able to push up prices further and further without a negative demand reaction. Especially during a potential recession, which some analysts and market watchers expect in the coming quarters, the parks business could see lower demand and might stop growing at a rate that is comparable to what we have seen in the recent past. Still, at least for now, the parks business is doing fine, and is the Disney unit investors don't have to worry about.
The media and entertainment distribution unit, however, is indeed a unit investors have to worry about. While the unit still generated around $1 billion of operating profit during the most recent quarter, or around $4 billion annualized, growth is anemic and margins are declining. That's a toxic combination for profits. When we consider the debt that Disney has taken on to pay for the Fox acquisition and the related interest expenses, the actual net profits of the media and entertainment distribution unit are even lower than the operating income metric suggests.
Disney's weak performance in the media and entertainment segment has several factors, one of them being the meager growth rate of Disney+ in the recent past. A couple of years ago, when the service was rolled out, many investors expected faster growth. It is important to note that Disney+ is not the only streaming service that is not growing at an attractive pace -- instead, it looks like consumers are not too eager to add new subscriptions overall. A harsher economic environment possibly plays a role, but streaming "fatigue" could be a factor for that as well. During the most recent quarter, Disney+ grew its subscriber base by 1% on a Core basis, while the performance was even worse when we also account for Hotstar. A 1% quarterly growth rate is not really what investors were expecting when Disney+ was introduced. Of course, price increases will allow Disney to grow its revenue in this unit faster compared to the subscriber growth rate, but even when we account for that, growth will likely not be especially strong in the near term.
Other media units are having problems as well: ESPN+ is losing money (like Disney+) and has experienced a decline in subscribers over the last quarter. Disney also hasn't been too successful with movies at the box office this year, with movies such as Indiana Jones and the Dial of Destiny or Ant-Man and the Wasp: Quantumania underperforming expectations. In contrast, other studios and companies have had a lot of success with movies such as Barbie from Warner Bros. Discovery, Inc. (WBD) or Super Mario Bros. Movie from Comcast (CMCSA). While Disney has been ruling the box office for quite some time, it seems to have lost its appeal to some degree, as other companies seem to perform better when it comes to creating content that audiences love.
Potential Amazon Deal
Due to Disney struggling in some areas, management has become more open to strategic action such as asset sales, joint ventures with other companies to boost growth, and so on. One such potential deal could see Disney work together with Amazon (AMZN) in order to bring a sports-focused streaming business online that could benefit from the broad reach of Amazon. Disney's own ESPN+ is, as noted above, struggling due to weak growth and not being profitable. But since ESPN has a strong brand and since it also has valuable content, a better sports streaming service definitely seems possible -- if Disney can get there with the help of Amazon, that could work out well for both companies. An outright sale of ESPN could work out for Disney as well, as this would help the company focus on other businesses while the proceeds could be used to pay down debt. But management has stated that it will likely not sell ESPN outright, thus strategic cooperation with a company such as Amazon (and the sale of a stake in ESPN) seems more likely for now. Either way, acting here is a good thing, which is why it is positive that management seems to be willing to do something.
Disney: Too Expensive Considering Its Problems
The share price slump has made Disney less expensive, but that does not mean that it is cheap. In fact, Disney still trades at 23x forward net profits. For a company with negative profit growth and rather unconvincing sales growth (a little below 4% during the most recent quarter), that is a rather high valuation, I believe. Disney could come under pressure in a potential recession, as consumers would likely cut back on discretionary purchases such as cinema tickets and amusement park visits. Also, Disney's debt will become more expensive over time due to rising interest rates unless the company puts significant sums of money towards debt reduction. There is still no dividend, and due to the profitability issues, it remains to be seen when and if the dividend is reinstated.
All in all, Disney has too many problems right now for me to buy it at more than 20x net profits. While the company has some very strong brands and great IP, it is not monetizing these assets in a great way right now. Until the company either turns around its business successfully or becomes significantly cheaper, I will stay on the sidelines."
Bron: https://seekingalpha.com/article/463142 ... erate-hold?
"
Disney: How Good Is It At The Nine-Year Low?
Aug. 27, 2023 10:54 PM ETThe Walt Disney Company (DIS)6 Comments
Summary
Disney's shares have hit a nine-year low, trading almost 60% below the all-time high.
The company's recent performance has been uneven, with declining profits and anemic growth in its media and entertainment segment.
Disney may explore a potential deal with Amazon to better monetize its ESPN asset.
However, the company's valuation is still high considering its problems.
Article Thesis
Disney (NYSE:DIS) has seen its shares slump to a nine-year low, which is why it makes sense to take another look at the company. While the valuation has come down, it is not especially low, and due to the many problems and issues Disney faces, I continue to stay on the sidelines for now.
What Happened?
Disney's shares have hit a new 9-year low last week, with shares trading at $83 at the time of writing. Shares have now slumped massively compared to where they traded just a couple of years ago:
Disney's shares are now trading almost 60% below the all-time high, while the company's enterprise value, which accounts for Disney's market capitalization and its debt, has declined a little less. Still, even Disney's EV is down quite a lot, suggesting it was way too high in the first place when there was a lot of hype about Disney's streaming service during the pandemic -- shares peaked in early 2021.
Since then, optimism about Disney's streaming service has waned, financial conditions have become tighter, resulting in valuation compression for many stocks due to higher discount rates, while Disney also had some operational issues.
Disney's Recent Performance
Disney reported its most recent quarterly earnings results earlier in August. The company missed revenue estimates and saw its sales grow by a meager 3.9%, while the company managed to beat earnings per share estimates. Still, earnings per share were down versus the previous year's quarter, dropping from $1.09 to $1.03 after backing out one-time items. Declining profits are, of course, bad, and considering that Disney is not trading at a low valuation, the market and investors weren't happy with the meager sales growth and declining profitability.
The performance across Disney's different business units has been very uneven in the recent past. The company's parks and resorts business, which is capital-intensive but where it has a huge moat, has been performing very well so far in 2023. The unit generated sales growth of 13% during the most recent quarter, relative to the previous year's quarter. That was the best growth rate among all Disney business units. Even better, the unit is highly profitable, generating an operating income of $2.4 billion with an attractive 29% operating margin. In contrast, the remainder of Disney grew a lot less and generated an operating income margin of just 8%, which can hardly be described as attractive. The compelling revenue growth in the parks business was partially driven by substantial price increases -- that works well so far, but it remains to be seen whether Disney will be able to push up prices further and further without a negative demand reaction. Especially during a potential recession, which some analysts and market watchers expect in the coming quarters, the parks business could see lower demand and might stop growing at a rate that is comparable to what we have seen in the recent past. Still, at least for now, the parks business is doing fine, and is the Disney unit investors don't have to worry about.
The media and entertainment distribution unit, however, is indeed a unit investors have to worry about. While the unit still generated around $1 billion of operating profit during the most recent quarter, or around $4 billion annualized, growth is anemic and margins are declining. That's a toxic combination for profits. When we consider the debt that Disney has taken on to pay for the Fox acquisition and the related interest expenses, the actual net profits of the media and entertainment distribution unit are even lower than the operating income metric suggests.
Disney's weak performance in the media and entertainment segment has several factors, one of them being the meager growth rate of Disney+ in the recent past. A couple of years ago, when the service was rolled out, many investors expected faster growth. It is important to note that Disney+ is not the only streaming service that is not growing at an attractive pace -- instead, it looks like consumers are not too eager to add new subscriptions overall. A harsher economic environment possibly plays a role, but streaming "fatigue" could be a factor for that as well. During the most recent quarter, Disney+ grew its subscriber base by 1% on a Core basis, while the performance was even worse when we also account for Hotstar. A 1% quarterly growth rate is not really what investors were expecting when Disney+ was introduced. Of course, price increases will allow Disney to grow its revenue in this unit faster compared to the subscriber growth rate, but even when we account for that, growth will likely not be especially strong in the near term.
Other media units are having problems as well: ESPN+ is losing money (like Disney+) and has experienced a decline in subscribers over the last quarter. Disney also hasn't been too successful with movies at the box office this year, with movies such as Indiana Jones and the Dial of Destiny or Ant-Man and the Wasp: Quantumania underperforming expectations. In contrast, other studios and companies have had a lot of success with movies such as Barbie from Warner Bros. Discovery, Inc. (WBD) or Super Mario Bros. Movie from Comcast (CMCSA). While Disney has been ruling the box office for quite some time, it seems to have lost its appeal to some degree, as other companies seem to perform better when it comes to creating content that audiences love.
Potential Amazon Deal
Due to Disney struggling in some areas, management has become more open to strategic action such as asset sales, joint ventures with other companies to boost growth, and so on. One such potential deal could see Disney work together with Amazon (AMZN) in order to bring a sports-focused streaming business online that could benefit from the broad reach of Amazon. Disney's own ESPN+ is, as noted above, struggling due to weak growth and not being profitable. But since ESPN has a strong brand and since it also has valuable content, a better sports streaming service definitely seems possible -- if Disney can get there with the help of Amazon, that could work out well for both companies. An outright sale of ESPN could work out for Disney as well, as this would help the company focus on other businesses while the proceeds could be used to pay down debt. But management has stated that it will likely not sell ESPN outright, thus strategic cooperation with a company such as Amazon (and the sale of a stake in ESPN) seems more likely for now. Either way, acting here is a good thing, which is why it is positive that management seems to be willing to do something.
Disney: Too Expensive Considering Its Problems
The share price slump has made Disney less expensive, but that does not mean that it is cheap. In fact, Disney still trades at 23x forward net profits. For a company with negative profit growth and rather unconvincing sales growth (a little below 4% during the most recent quarter), that is a rather high valuation, I believe. Disney could come under pressure in a potential recession, as consumers would likely cut back on discretionary purchases such as cinema tickets and amusement park visits. Also, Disney's debt will become more expensive over time due to rising interest rates unless the company puts significant sums of money towards debt reduction. There is still no dividend, and due to the profitability issues, it remains to be seen when and if the dividend is reinstated.
All in all, Disney has too many problems right now for me to buy it at more than 20x net profits. While the company has some very strong brands and great IP, it is not monetizing these assets in a great way right now. Until the company either turns around its business successfully or becomes significantly cheaper, I will stay on the sidelines."
Bron: https://seekingalpha.com/article/463142 ... erate-hold?
Buy and Hold blijft mijn strategie, tenzij een aandeel 20 percent gestegen is in een periode van enkele weken/maanden na aankoop.
Re: Walt Disney
Disney: Returning To Former Glory
Sep. 01, 2023
Summary
Disney is trading at multi-year lows and has become a battleground stock.
The company has significantly more debt and lower operating income than it had pre-pandemic.
We believe investors should wait on the sidelines until the fundamental picture materially improves and the narrative surrounding the company changes.
Thesis
Despite trading at multi-year lows, we believe that Disney (NYSE:DIS) remains overvalued and is currently a fundamentally broken company. The discussion around Disney is often made a political one, but the story here has more to do with distractions and poor execution. Fortunately, for investors, this isn't the first time that Disney has been in a difficult situation and we can look to the past for clues on how this might play out.
The Story of Walt Disney and EPCOT
Disney as a company is no stranger to navigating tough times. In 1941 Disney had issues with a massive workers strike. The Disney animators' strike was a nearly 4-month work stoppage that resulted in Disney signing a contract with the Screen Cartoonist's Guild. This was a major challenge to the company and they ultimately came out of it stronger. They would end up facing another organizational challenge nearly 25 years later.
The creation of what is now Walt Disney World in Florida was originally supposed to focus on building EPCOT. This acronym stands for Experimental Prototype Community Of Tomorrow. This project centered around constructing the city of the future and would feature many groundbreaking innovations, serving as a model for how other urban centers could develop across the country. The city was planned to house anywhere from 20,000 to 100,000 people (the number changed at different times during the planning stages). The theme park was just a small piece of the puzzle and was meant to be a way to attract tourists to the area and fund the city's construction.
The project's massive cost and scale as well as concerns about feasibility caused EPCOT to be viewed with skepticism by some within the organization. When Walt died the project was put on hold. EPCOT was eventually scaled down and built in park form. Some of the inventions Walt designed for the city of the future were incorporated into the various parks (such as the trash system). Others were turned into rides at the parks (such as the PeopleMover). At the end of the day what began as an ill-advised financial and operational nightmare turned out to have positive effects and no lasting negative consequences.
Financial Challenges in the DTC Segment and Disappointing Movie Profitability
In many ways, EPCOT is similar to Disney's adventure into streaming. Disney has been spending way too much time, energy, and most importantly money on streaming and has gotten distracted from their previous focus on creating profitable content and profitable development of IP. The costs of streaming have become astronomical and content is quickly becoming a money pit. In their most recently reported quarter, the company reported an operating loss of $512 million in their Direct-to-Consumer segment. The company mentions in the report that for both Disney+ and Hulu their higher revenue numbers and decreased marketing spend were offset by an increase in programming and production costs. This shows that content spend continues to increase while streaming as a whole remains unprofitable...
...Price Action and Valuation
The price action here looks atrocious and has turned Disney into a battleground stock. On one side there are bulls who believe the selloff is unwarranted, and on the other side, there are bears who believe there is more to come. The bulls will point to a storied franchise and massive IP catalogue, and the bears will point to poor fundamentals and a potential culture problem...
Bron: https://seekingalpha.com/article/463257 ... rmer-glory?
Sep. 01, 2023
Summary
Disney is trading at multi-year lows and has become a battleground stock.
The company has significantly more debt and lower operating income than it had pre-pandemic.
We believe investors should wait on the sidelines until the fundamental picture materially improves and the narrative surrounding the company changes.
Thesis
Despite trading at multi-year lows, we believe that Disney (NYSE:DIS) remains overvalued and is currently a fundamentally broken company. The discussion around Disney is often made a political one, but the story here has more to do with distractions and poor execution. Fortunately, for investors, this isn't the first time that Disney has been in a difficult situation and we can look to the past for clues on how this might play out.
The Story of Walt Disney and EPCOT
Disney as a company is no stranger to navigating tough times. In 1941 Disney had issues with a massive workers strike. The Disney animators' strike was a nearly 4-month work stoppage that resulted in Disney signing a contract with the Screen Cartoonist's Guild. This was a major challenge to the company and they ultimately came out of it stronger. They would end up facing another organizational challenge nearly 25 years later.
The creation of what is now Walt Disney World in Florida was originally supposed to focus on building EPCOT. This acronym stands for Experimental Prototype Community Of Tomorrow. This project centered around constructing the city of the future and would feature many groundbreaking innovations, serving as a model for how other urban centers could develop across the country. The city was planned to house anywhere from 20,000 to 100,000 people (the number changed at different times during the planning stages). The theme park was just a small piece of the puzzle and was meant to be a way to attract tourists to the area and fund the city's construction.
The project's massive cost and scale as well as concerns about feasibility caused EPCOT to be viewed with skepticism by some within the organization. When Walt died the project was put on hold. EPCOT was eventually scaled down and built in park form. Some of the inventions Walt designed for the city of the future were incorporated into the various parks (such as the trash system). Others were turned into rides at the parks (such as the PeopleMover). At the end of the day what began as an ill-advised financial and operational nightmare turned out to have positive effects and no lasting negative consequences.
Financial Challenges in the DTC Segment and Disappointing Movie Profitability
In many ways, EPCOT is similar to Disney's adventure into streaming. Disney has been spending way too much time, energy, and most importantly money on streaming and has gotten distracted from their previous focus on creating profitable content and profitable development of IP. The costs of streaming have become astronomical and content is quickly becoming a money pit. In their most recently reported quarter, the company reported an operating loss of $512 million in their Direct-to-Consumer segment. The company mentions in the report that for both Disney+ and Hulu their higher revenue numbers and decreased marketing spend were offset by an increase in programming and production costs. This shows that content spend continues to increase while streaming as a whole remains unprofitable...
...Price Action and Valuation
The price action here looks atrocious and has turned Disney into a battleground stock. On one side there are bulls who believe the selloff is unwarranted, and on the other side, there are bears who believe there is more to come. The bulls will point to a storied franchise and massive IP catalogue, and the bears will point to poor fundamentals and a potential culture problem...
Bron: https://seekingalpha.com/article/463257 ... rmer-glory?
Buy and Hold blijft mijn strategie, tenzij een aandeel 20 percent gestegen is in een periode van enkele weken/maanden na aankoop.
Re: Walt Disney
RiverPark Large Growth Fund highlighted stocks like The Walt Disney Company (NYSE:DIS) in the second quarter 2023 investor letter. Headquartered in Burbank, California, The Walt Disney Company (NYSE:DIS) is an entertainment company that operates through Disney Media and Entertainment Distribution; and Disney Parks, Experiences, and Products. On September 6, 2023, The Walt Disney Company (NYSE:DIS) stock closed at $80.98 per share. One-month return of The Walt Disney Company (NYSE:DIS) was -7.44%, and its shares lost 28.14% of their value over the last 52 weeks. The Walt Disney Company (NYSE:DIS) has a market capitalization of $148.176 billion.
RiverPark Large Growth Fund made the following comment about The Walt Disney Company (NYSE:DIS) in its Q2 2023 investor letter:
"The Walt Disney Company (NYSE:DIS): DIS was a top detractor in the quarter following mixed FY2Q results. Revenue of $22 billion was up 13% year over year, although EPS, at $0.93, was down 14% year over year. Disney Plus, part of the company’s direct-to-consumer business (DTC), had better subscriber numbers than anticipated despite a price increase, although losses at the DTC business as a whole are growing. The linear TV business also continues to suffer secular headwinds with - 10% revenue growth, and the company faced inflationary cost pressures at its theme parks.
DIS is nevertheless blessed with a deep library of unique content that includes both live sports (providing large, non-time shifted audiences) and incomparable brands including Disney, Marvel, Pixar and Lucasfilm, as well as the ABC network. The company also has a wealth of upcoming new content, with a plan to release over 100 original titles per year on a $30 billion annual content production budget. Now that the disruption in its theme park, cruise and theatrical businesses has come to an end, we believe that Disney is among the best-positioned media companies in the new landscape to combine multi-channel and DTC distribution.
We think the return of long-time CEO Bob Iger will lead to higher and more consistent profitability at the theme parks, better value realization in the linear assets, and consolidation of the company’s DTC assets leading to higher profitability sooner. We therefore expect DIS to grow its free cash flow significantly over the next 3-4 years, from its depressed $1 billion last year, returning to and exceeding its previous $10 billion peak in 2018."
The Walt Disney Company (NYSE:DIS) is in 21st position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 92 hedge fund portfolios held The Walt Disney Company (NYSE:DIS) at the end of second quarter which was 95 in the previous quarter.
Bron: https://finance.yahoo.com/news/
RiverPark Large Growth Fund made the following comment about The Walt Disney Company (NYSE:DIS) in its Q2 2023 investor letter:
"The Walt Disney Company (NYSE:DIS): DIS was a top detractor in the quarter following mixed FY2Q results. Revenue of $22 billion was up 13% year over year, although EPS, at $0.93, was down 14% year over year. Disney Plus, part of the company’s direct-to-consumer business (DTC), had better subscriber numbers than anticipated despite a price increase, although losses at the DTC business as a whole are growing. The linear TV business also continues to suffer secular headwinds with - 10% revenue growth, and the company faced inflationary cost pressures at its theme parks.
DIS is nevertheless blessed with a deep library of unique content that includes both live sports (providing large, non-time shifted audiences) and incomparable brands including Disney, Marvel, Pixar and Lucasfilm, as well as the ABC network. The company also has a wealth of upcoming new content, with a plan to release over 100 original titles per year on a $30 billion annual content production budget. Now that the disruption in its theme park, cruise and theatrical businesses has come to an end, we believe that Disney is among the best-positioned media companies in the new landscape to combine multi-channel and DTC distribution.
We think the return of long-time CEO Bob Iger will lead to higher and more consistent profitability at the theme parks, better value realization in the linear assets, and consolidation of the company’s DTC assets leading to higher profitability sooner. We therefore expect DIS to grow its free cash flow significantly over the next 3-4 years, from its depressed $1 billion last year, returning to and exceeding its previous $10 billion peak in 2018."
The Walt Disney Company (NYSE:DIS) is in 21st position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 92 hedge fund portfolios held The Walt Disney Company (NYSE:DIS) at the end of second quarter which was 95 in the previous quarter.
Bron: https://finance.yahoo.com/news/
Buy and Hold blijft mijn strategie, tenzij een aandeel 20 percent gestegen is in een periode van enkele weken/maanden na aankoop.
Re: Walt Disney
Disney's Road To Recovery: Streaming, Experiences, And Future Profits
Sep. 24, 2023
Summary
Disney's operating losses in its Media and Entertainment segments have led to a shrinking margin, but if margins improve, it could be a good investment opportunity.
Disney dominates the box office and holds a significant market share in the entertainment industry.
The streaming boom presents a potential for Disney to increase its margins, and the expansion of in-person experiences like theme parks and cruises can contribute to its growth.
Thesis
The Walt Disney Company (NYSE:DIS), aka Disney, is a massive media/entertainment behemoth known for making some of the most recognizable characters in pop culture. With their amusement parks being world-renowned, the pandemic put a halt to this lucrative part of their business. This led to Disney entering the race for streaming services, Disney+, and with their large library of intellectual property, people stuck at home were hard-pressed to find a service that could compete with all these classic movies and new shows. As of right now, Disney is at a 52-week low largely due to its shrinking margin that has not recovered to pre-pandemic levels. If Disney is able to bring their margins more in-line with their past performance, Disney could be an opportunity to add a household name to your portfolio at a reasonable price.
Company Overview
The Walt Disney Company contains 5 segments that make up their core business: Media & Entertainment, Parks, Experiences & Products, Linear Networks, Direct-to-Consumer, and Content sales/Licensing.
Media & Entertainment is the umbrella combining their Linear Networks, Direct-to-Consumer and Content sales/Licensing. Linear Networks are their television programs. Direct-to-Consumer is their streaming platforms. Content sales/Licensing is their revenue generated from allowing other companies to use their intellectual property.
Disney’s Parks, Experiences & Products is a culmination of all their in-person attractions (amusement parks, cruises, vacations) and sales they make on physical products in stores.
As seen in the graphs, Disney’s major fault is their operating losses in their Media and Entertainment segments, leading to a roughly 8% margin compared to 28% with their Parks Experiences and Products.
Industry Overview
The global entertainment market is expected to grow at a 8-10% CAGR [Yahoo Finance, 2023] [Statista, 2023]. Advertising spend is also projected to grow by over 5% each year [PwC, 2023]. With so many streaming services detracting from the subscription business model, those who have the customer base and can shift focus to ad revenue will be the models that prevail. Disney has positioned itself well for this shift by having multiple options for consumers to save on their subscription that include ads. Below is a table of their options and the new price increases for this fall [Business Insider, 2023]
Additionally, according to Data Bridge Market Research, the global amusement park market is expected to grow at a 4.97% compound annual growth rate between 2022-2029, providing Disney with another avenue of growth: "The Walt Disney Company is developing plans to accelerate and expand investment in its Parks, Experiences, and Products segment to nearly double capital expenditures over the course of approximately 10 years to roughly $60 billion, including by investing in expanding and enhancing domestic and international parks and cruise line capacity."
Going back to 2019, Disney brought in nearly 40% of box office revenue in the US. Big brands like Marvel, Pixar, and Lucasfilms (all owned by Disney!) have a loyal fan base, shown by Disney taking 7 out of the top 8 grossing movies in the US during 2019 (Box Office Mojo, 2019). With the addition of Fox, creators of “The King’s Man” and “Free Guy”, under Disney’s umbrella, it would be no surprise to see Disney continue to hold their command over the media entertainment market.
Streaming Boom → Bigger Margin Business (Potentially)
In less than two years of starting Disney+, they had over 100 million subscribers [Statista, 2023]! Being that streaming services have shown to be a profitable business [Netflix current at 13% net margin, Macrotrends, 2023], if Disney can figure out the right ratio of content-costs to box-office to home entertainment, Disney could stand to push their total net margins higher than they were before COVID [~20%, Macrotrends, 2023]. Currently they are not making profit from their streaming service. They have seen a bit of tapering from the consumer as their subscriber count has fallen slightly over the last quarter but that is primarily due to international subs leaving after Disney did not renew rights to the Cricket Tournament (Disney, 2023). On the surface this seems like a big hit but this segment is the lowest in terms of revenue per subscriber at $0.59 [Disney, 2023]. Looking forward, it is a competitive space many services will be competing for consumers. With Disney’s library, it will be hard for other competitors to bring the same fire power Disney has built in its intellectual property.
Expansion of In-Person Experiences
12 Theme Parks, 5 Cruise ships [Disney, 2023]
With multiple of the most popular amusement parks in the world: Magic Kingdom, Tokyo Disneyland, Disneyland Anaheim, Shanghai Disneyland, Disney continues to hold dominance with roughly 23% of the market share and the next largest competitor only around 11% [Global Newswire, 2023]. Many of these parks are still seeing attendance down 50% [Statistia, 2023] from pre-pandemic levels which is contributing to the much lower net income on the Disney income statement. With the strict international policies finally being eased, and the market projected to grow at a CAGR of 11% [Global Newswire, 2023], Disney is in a great place to capitalize on this growth and turn it into cash flow.
Disney was also rated as being one of the top five cruise line experiences in 2022 [Statistia, 2022]. While discretionary spending will be a key indicator of how well Disney’s growing fleet will perform, cruises can be more affordable options for consumers looking for vacation time. Disney will stand out from the rest as the choice for family vacations.
Catalysts
Loosening Restrictions on In-person Experiences
With parks, experiences, and products being the second largest operating segments for Disney ($28.7 billion in 2022) and most parks’ attendance being below 50% of pre pandemic numbers, the easing of restrictions or growing attendance rates are massive opportunitites for Disney to return to their previous stronger margin business [Statistia & Disney, 2023]. In addition, Disney has continued to make investments into their cruise experiences which have seen positive feedback as one of the top five cruise lines last year. As restrictions ease and people are looking to get away, Disney’s ticket sales would be a good indicator of what success to expect in their quarterly reports.
Regaining Profit Margin
Disney, among many other large businesses, has turned their attention towards optimization during the pandemic slowdown and recovery. This often led to large layoffs. In the first half of this year, Disney has already laid off 7,000 employees [Variety, 2023]. While this is not always an encouraging sign, the positive outcome of these events is Disney’s return to profitability from the large fall in 2020. As Bog Iger (CEO) continues to slim down Disney’s operations, it could lead to large shifts in their profit margin when their business returns to pre-pandemic levels.
Financials
Revenue for Q3 2023 is $22.3 billion, up 4% YoY but slightly under expectations of $22.5 billion. This increase was due primarily to a 13% increase in their parks, experiences, and products segment. Disney posted an operating loss of ($134) million, which was influenced by the ($512) million dollar loss in their direct-to-consumer streaming segment. This is showing improvement from their loss of ($1) billion last year. Earning per share from continued operations in Q3 was ($0.25) while last year’s Q3 was an income of $0.77. The loss was primarily due to the large $2.65 billion dollar restructuring and impairment charge from removing content from its streaming platform. [Disney 10-K & 10-Q, 2023]
While Disney has lost subscribers since its peak, a majority of those subscribers were a part of Disney+ Hotstar. This segment is their lowest revenue per subscriber of $0.59 per user and accounts for 12 million of the lost subscribers from Q2 to Q3. Disney did not renew their rights to the cricket tournaments which causes many of these subscribers to leave..
Disney’s current liabilities are $20.2 billion and cash/cash equivalents are $11.6 billion. Disney has 57% coverage of their current liabilities and can generate revenue of over $20 billion in less than 3 months given their current pace. Total current liabilities sit at $29.07 billion while total current assets sit at $29.1 billion which have slightly declined YoY.
Valuation
Given analyst estimates, Disney sits with a median expectation of $110, ranging from $65 to $146. The current uncertainty around when Robert Igar’s efficiency will lead to pre-pandemic margins is a big question mark. Rest assured, this will be a challenging time for Disney as their two largest segments are in major transformations (streaming and park/experiences) as we transition out of the pandemic shutdowns. If you are in this investment for the long term (5+ years) and Disney aligns with your investment portfolio, you may be in for some volatility but also get a household name for a great price.
Risks
If Disney is not able to return to pre-pandemic margin levels (~20%), then the potential upside of Disney from this point will be greatly diminished. With Robert Igar (CEO) at the helm and honing in on making Disney efficient for the long-term, this risk seems unlikely to be the case when taking a long term horizon of 5+ years.
If amusement parks and in-person experiences do not return to previous attendance/sales then that would weigh down the second largest revenue segment of Disney. While this is unlikely given the trends and projected CAGR for this market, it is something to be aware of.
If they are unable to find the balance in their cost of content production to box office and streaming service, their streaming services will be a losing business for them. One of the crunches dealt with is the advertising costs. Advertisers are looking for major customer penetration and that is a tad more difficult to come by with the plethora of streaming services that arose in the last few years. There is also concern over consumer spending which has dissuaded advertisers from spending more money for ad time. This seems to be a temporary issue that came from the rapidly changing market conditions. With a long-term focus, I imagine that Disney will be a major player in the streaming market and they will figure out what ways work best to make it a consistent cash flowing segment.
Conclusion
Disney is navigating multiple storms (how to be the best streaming platform, getting in-person experiences back to pre-pandemic levels, optimizing to stay cash flow positive) and while their revenue is growing, their profitability is still well below previous highs. This will probably continue to be the case until major increases in sales are made in their in-person experiences like cruise lines and parks or when they hit profitability in their streaming service. With the large moat that Disney holds in intellectual property, customer base, and infrastructure, it is difficult to see how Disney would not be able to return to pre-pandemic profit margins, eventually. The big question then will be how long does it take? If you are in it for the long term (5+ years) then I think it would be hard to bet against the Walt Disney Company.
earnings and events coverage
Bron: https://seekingalpha.com/article/463692 ... ure-profit
Sep. 24, 2023
Summary
Disney's operating losses in its Media and Entertainment segments have led to a shrinking margin, but if margins improve, it could be a good investment opportunity.
Disney dominates the box office and holds a significant market share in the entertainment industry.
The streaming boom presents a potential for Disney to increase its margins, and the expansion of in-person experiences like theme parks and cruises can contribute to its growth.
Thesis
The Walt Disney Company (NYSE:DIS), aka Disney, is a massive media/entertainment behemoth known for making some of the most recognizable characters in pop culture. With their amusement parks being world-renowned, the pandemic put a halt to this lucrative part of their business. This led to Disney entering the race for streaming services, Disney+, and with their large library of intellectual property, people stuck at home were hard-pressed to find a service that could compete with all these classic movies and new shows. As of right now, Disney is at a 52-week low largely due to its shrinking margin that has not recovered to pre-pandemic levels. If Disney is able to bring their margins more in-line with their past performance, Disney could be an opportunity to add a household name to your portfolio at a reasonable price.
Company Overview
The Walt Disney Company contains 5 segments that make up their core business: Media & Entertainment, Parks, Experiences & Products, Linear Networks, Direct-to-Consumer, and Content sales/Licensing.
Media & Entertainment is the umbrella combining their Linear Networks, Direct-to-Consumer and Content sales/Licensing. Linear Networks are their television programs. Direct-to-Consumer is their streaming platforms. Content sales/Licensing is their revenue generated from allowing other companies to use their intellectual property.
Disney’s Parks, Experiences & Products is a culmination of all their in-person attractions (amusement parks, cruises, vacations) and sales they make on physical products in stores.
As seen in the graphs, Disney’s major fault is their operating losses in their Media and Entertainment segments, leading to a roughly 8% margin compared to 28% with their Parks Experiences and Products.
Industry Overview
The global entertainment market is expected to grow at a 8-10% CAGR [Yahoo Finance, 2023] [Statista, 2023]. Advertising spend is also projected to grow by over 5% each year [PwC, 2023]. With so many streaming services detracting from the subscription business model, those who have the customer base and can shift focus to ad revenue will be the models that prevail. Disney has positioned itself well for this shift by having multiple options for consumers to save on their subscription that include ads. Below is a table of their options and the new price increases for this fall [Business Insider, 2023]
Additionally, according to Data Bridge Market Research, the global amusement park market is expected to grow at a 4.97% compound annual growth rate between 2022-2029, providing Disney with another avenue of growth: "The Walt Disney Company is developing plans to accelerate and expand investment in its Parks, Experiences, and Products segment to nearly double capital expenditures over the course of approximately 10 years to roughly $60 billion, including by investing in expanding and enhancing domestic and international parks and cruise line capacity."
Going back to 2019, Disney brought in nearly 40% of box office revenue in the US. Big brands like Marvel, Pixar, and Lucasfilms (all owned by Disney!) have a loyal fan base, shown by Disney taking 7 out of the top 8 grossing movies in the US during 2019 (Box Office Mojo, 2019). With the addition of Fox, creators of “The King’s Man” and “Free Guy”, under Disney’s umbrella, it would be no surprise to see Disney continue to hold their command over the media entertainment market.
Streaming Boom → Bigger Margin Business (Potentially)
In less than two years of starting Disney+, they had over 100 million subscribers [Statista, 2023]! Being that streaming services have shown to be a profitable business [Netflix current at 13% net margin, Macrotrends, 2023], if Disney can figure out the right ratio of content-costs to box-office to home entertainment, Disney could stand to push their total net margins higher than they were before COVID [~20%, Macrotrends, 2023]. Currently they are not making profit from their streaming service. They have seen a bit of tapering from the consumer as their subscriber count has fallen slightly over the last quarter but that is primarily due to international subs leaving after Disney did not renew rights to the Cricket Tournament (Disney, 2023). On the surface this seems like a big hit but this segment is the lowest in terms of revenue per subscriber at $0.59 [Disney, 2023]. Looking forward, it is a competitive space many services will be competing for consumers. With Disney’s library, it will be hard for other competitors to bring the same fire power Disney has built in its intellectual property.
Expansion of In-Person Experiences
12 Theme Parks, 5 Cruise ships [Disney, 2023]
With multiple of the most popular amusement parks in the world: Magic Kingdom, Tokyo Disneyland, Disneyland Anaheim, Shanghai Disneyland, Disney continues to hold dominance with roughly 23% of the market share and the next largest competitor only around 11% [Global Newswire, 2023]. Many of these parks are still seeing attendance down 50% [Statistia, 2023] from pre-pandemic levels which is contributing to the much lower net income on the Disney income statement. With the strict international policies finally being eased, and the market projected to grow at a CAGR of 11% [Global Newswire, 2023], Disney is in a great place to capitalize on this growth and turn it into cash flow.
Disney was also rated as being one of the top five cruise line experiences in 2022 [Statistia, 2022]. While discretionary spending will be a key indicator of how well Disney’s growing fleet will perform, cruises can be more affordable options for consumers looking for vacation time. Disney will stand out from the rest as the choice for family vacations.
Catalysts
Loosening Restrictions on In-person Experiences
With parks, experiences, and products being the second largest operating segments for Disney ($28.7 billion in 2022) and most parks’ attendance being below 50% of pre pandemic numbers, the easing of restrictions or growing attendance rates are massive opportunitites for Disney to return to their previous stronger margin business [Statistia & Disney, 2023]. In addition, Disney has continued to make investments into their cruise experiences which have seen positive feedback as one of the top five cruise lines last year. As restrictions ease and people are looking to get away, Disney’s ticket sales would be a good indicator of what success to expect in their quarterly reports.
Regaining Profit Margin
Disney, among many other large businesses, has turned their attention towards optimization during the pandemic slowdown and recovery. This often led to large layoffs. In the first half of this year, Disney has already laid off 7,000 employees [Variety, 2023]. While this is not always an encouraging sign, the positive outcome of these events is Disney’s return to profitability from the large fall in 2020. As Bog Iger (CEO) continues to slim down Disney’s operations, it could lead to large shifts in their profit margin when their business returns to pre-pandemic levels.
Financials
Revenue for Q3 2023 is $22.3 billion, up 4% YoY but slightly under expectations of $22.5 billion. This increase was due primarily to a 13% increase in their parks, experiences, and products segment. Disney posted an operating loss of ($134) million, which was influenced by the ($512) million dollar loss in their direct-to-consumer streaming segment. This is showing improvement from their loss of ($1) billion last year. Earning per share from continued operations in Q3 was ($0.25) while last year’s Q3 was an income of $0.77. The loss was primarily due to the large $2.65 billion dollar restructuring and impairment charge from removing content from its streaming platform. [Disney 10-K & 10-Q, 2023]
While Disney has lost subscribers since its peak, a majority of those subscribers were a part of Disney+ Hotstar. This segment is their lowest revenue per subscriber of $0.59 per user and accounts for 12 million of the lost subscribers from Q2 to Q3. Disney did not renew their rights to the cricket tournaments which causes many of these subscribers to leave..
Disney’s current liabilities are $20.2 billion and cash/cash equivalents are $11.6 billion. Disney has 57% coverage of their current liabilities and can generate revenue of over $20 billion in less than 3 months given their current pace. Total current liabilities sit at $29.07 billion while total current assets sit at $29.1 billion which have slightly declined YoY.
Valuation
Given analyst estimates, Disney sits with a median expectation of $110, ranging from $65 to $146. The current uncertainty around when Robert Igar’s efficiency will lead to pre-pandemic margins is a big question mark. Rest assured, this will be a challenging time for Disney as their two largest segments are in major transformations (streaming and park/experiences) as we transition out of the pandemic shutdowns. If you are in this investment for the long term (5+ years) and Disney aligns with your investment portfolio, you may be in for some volatility but also get a household name for a great price.
Risks
If Disney is not able to return to pre-pandemic margin levels (~20%), then the potential upside of Disney from this point will be greatly diminished. With Robert Igar (CEO) at the helm and honing in on making Disney efficient for the long-term, this risk seems unlikely to be the case when taking a long term horizon of 5+ years.
If amusement parks and in-person experiences do not return to previous attendance/sales then that would weigh down the second largest revenue segment of Disney. While this is unlikely given the trends and projected CAGR for this market, it is something to be aware of.
If they are unable to find the balance in their cost of content production to box office and streaming service, their streaming services will be a losing business for them. One of the crunches dealt with is the advertising costs. Advertisers are looking for major customer penetration and that is a tad more difficult to come by with the plethora of streaming services that arose in the last few years. There is also concern over consumer spending which has dissuaded advertisers from spending more money for ad time. This seems to be a temporary issue that came from the rapidly changing market conditions. With a long-term focus, I imagine that Disney will be a major player in the streaming market and they will figure out what ways work best to make it a consistent cash flowing segment.
Conclusion
Disney is navigating multiple storms (how to be the best streaming platform, getting in-person experiences back to pre-pandemic levels, optimizing to stay cash flow positive) and while their revenue is growing, their profitability is still well below previous highs. This will probably continue to be the case until major increases in sales are made in their in-person experiences like cruise lines and parks or when they hit profitability in their streaming service. With the large moat that Disney holds in intellectual property, customer base, and infrastructure, it is difficult to see how Disney would not be able to return to pre-pandemic profit margins, eventually. The big question then will be how long does it take? If you are in it for the long term (5+ years) then I think it would be hard to bet against the Walt Disney Company.
earnings and events coverage
Bron: https://seekingalpha.com/article/463692 ... ure-profit
Buy and Hold blijft mijn strategie, tenzij een aandeel 20 percent gestegen is in een periode van enkele weken/maanden na aankoop.
Re: Walt Disney
Trailer van nieuwe Disney-film record aantal keer bekeken
De trailer van een van Disneys nieuwste producties, Wish (2023), imponeert met een record aantal weergaven. Het is de best bekeken Disney animatie-trailer sinds Frozen 2 (2019). De nieuwe beelden zijn inmiddels 66,5 miljoen keer bekeken via online platforms.
Disney Animations 62e film
Het succes van de film nog vóór release beperkt zich niet tot het aantal weergaven, de eerste reacties zijn uitermate positief. Wish krijgt veel lof voor het originele plot, de meeslepende muziek, de schattige personages en de boosaardige schurk die daar tegenover staat. Het succes van de trailer komt op een uitstekend moment voor de studio. Disney Animation viert dit jaar haar 100-jarig jubileum en brengt met Wish haar 62e film uit.
Alleenrecht op wensen
In deze veelbelovende nieuwe animatie volgen we de 17-jarige Asha. Asha doet een wens die zo krachtig is dat deze beantwoord wordt door een bijzondere kracht, de kleine grenzeloze energie genaamd Star. Haar idealistische wens heeft helaas ook vervelende gevolgen en brengt de tiener in conflict met de heerser van het koninkrijk die meent alleenrecht te hebben op het vervullen van wensen.
Bron: https://www.msn.com/nl-be/nieuws/other/ ... er-bekeken
De trailer van een van Disneys nieuwste producties, Wish (2023), imponeert met een record aantal weergaven. Het is de best bekeken Disney animatie-trailer sinds Frozen 2 (2019). De nieuwe beelden zijn inmiddels 66,5 miljoen keer bekeken via online platforms.
Disney Animations 62e film
Het succes van de film nog vóór release beperkt zich niet tot het aantal weergaven, de eerste reacties zijn uitermate positief. Wish krijgt veel lof voor het originele plot, de meeslepende muziek, de schattige personages en de boosaardige schurk die daar tegenover staat. Het succes van de trailer komt op een uitstekend moment voor de studio. Disney Animation viert dit jaar haar 100-jarig jubileum en brengt met Wish haar 62e film uit.
Alleenrecht op wensen
In deze veelbelovende nieuwe animatie volgen we de 17-jarige Asha. Asha doet een wens die zo krachtig is dat deze beantwoord wordt door een bijzondere kracht, de kleine grenzeloze energie genaamd Star. Haar idealistische wens heeft helaas ook vervelende gevolgen en brengt de tiener in conflict met de heerser van het koninkrijk die meent alleenrecht te hebben op het vervullen van wensen.
Bron: https://www.msn.com/nl-be/nieuws/other/ ... er-bekeken
Buy and Hold blijft mijn strategie, tenzij een aandeel 20 percent gestegen is in een periode van enkele weken/maanden na aankoop.
Re: Walt Disney
sjos schreef:
> Trailer van nieuwe Disney-film record aantal keer bekeken
>
> De trailer van een van Disneys nieuwste producties, Wish (2023), imponeert
> met een record aantal weergaven. Het is de best bekeken Disney
> animatie-trailer sinds Frozen 2 (2019). De nieuwe beelden zijn inmiddels
> 66,5 miljoen keer bekeken via online platforms.
> Disney Animations 62e film
> Het succes van de film nog vóór release beperkt zich niet tot het aantal
> weergaven, de eerste reacties zijn uitermate positief. Wish krijgt veel lof
> voor het originele plot, de meeslepende muziek, de schattige personages en
> de boosaardige schurk die daar tegenover staat. Het succes van de trailer
> komt op een uitstekend moment voor de studio. Disney Animation viert dit
> jaar haar 100-jarig jubileum en brengt met Wish haar 62e film uit.
> Alleenrecht op wensen
> In deze veelbelovende nieuwe animatie volgen we de 17-jarige Asha. Asha
> doet een wens die zo krachtig is dat deze beantwoord wordt door een
> bijzondere kracht, de kleine grenzeloze energie genaamd Star. Haar
> idealistische wens heeft helaas ook vervelende gevolgen en brengt de tiener
> in conflict met de heerser van het koninkrijk die meent alleenrecht te
> hebben op het vervullen van wensen.
>
> Bron:
> https://www.msn.com/nl-be/nieuws/other/ ... er-bekeken
We zien wel. De afgelopen tijd was er een karrevracht aan ideologisch geladen flops. Terwijl ze zo'n goede films konden maken de jaren voordien die maatschappelijk ook heel inclusief waren zonder beledigend of belerend te doen (Vaiana, Encanto bv.).
> Trailer van nieuwe Disney-film record aantal keer bekeken
>
> De trailer van een van Disneys nieuwste producties, Wish (2023), imponeert
> met een record aantal weergaven. Het is de best bekeken Disney
> animatie-trailer sinds Frozen 2 (2019). De nieuwe beelden zijn inmiddels
> 66,5 miljoen keer bekeken via online platforms.
> Disney Animations 62e film
> Het succes van de film nog vóór release beperkt zich niet tot het aantal
> weergaven, de eerste reacties zijn uitermate positief. Wish krijgt veel lof
> voor het originele plot, de meeslepende muziek, de schattige personages en
> de boosaardige schurk die daar tegenover staat. Het succes van de trailer
> komt op een uitstekend moment voor de studio. Disney Animation viert dit
> jaar haar 100-jarig jubileum en brengt met Wish haar 62e film uit.
> Alleenrecht op wensen
> In deze veelbelovende nieuwe animatie volgen we de 17-jarige Asha. Asha
> doet een wens die zo krachtig is dat deze beantwoord wordt door een
> bijzondere kracht, de kleine grenzeloze energie genaamd Star. Haar
> idealistische wens heeft helaas ook vervelende gevolgen en brengt de tiener
> in conflict met de heerser van het koninkrijk die meent alleenrecht te
> hebben op het vervullen van wensen.
>
> Bron:
> https://www.msn.com/nl-be/nieuws/other/ ... er-bekeken
We zien wel. De afgelopen tijd was er een karrevracht aan ideologisch geladen flops. Terwijl ze zo'n goede films konden maken de jaren voordien die maatschappelijk ook heel inclusief waren zonder beledigend of belerend te doen (Vaiana, Encanto bv.).
