Disney’s business has been expanding for decades. By this point, it now owns production/animation studios, theme parks, cruise lines and intellectual property. At first glance, this seems like a good thing. However, it also has investors scrutinizing how Disney plans to expand its business in the coming years. Sure, it launched Disney+ but this is hardly a unique idea. Almost every other major production company has its own streaming service. Disney+ was also incredibly late to the party. It was launched a full 12 years after Netflix first introduced streaming.

When looking at Disney stock returns, it seems as if investors have been losing their excitement. Over the past 5 years, Disney (NYSE: DIS) stock is up about 60%. This pales in comparison to major tech companies like Netflix (Nasdaq: NFLX) up 491%, Amazon (Nasdaq: AMZN) up 366% or Microsoft (Nasdaq: MSFT) up 455%. Even the S&P 500 Index returned almost double what Disney did.

This has investors questioning whether or not to buy Disney stock. As we enter 2022, is it time to swap Disney stock for another blue chip? Or does The Mouse still deserve its “never sell” status?

Let’s examine whether or not you should buy Disney stock.

Is This A Good Time to Buy Disney Stock?

There’s definitely such a thing as a “good stock, bad timing.” Some companies have stellar business models, which makes them a good stock to invest in. However, if you buy into this stock at the wrong time then you might find yourself regretting your decision. It’s a little bit like breaking bad news to your significant other.

You have two options. One, you could wake your significant other up at 6am to tell them the bad news. Since they haven’t had coffee or breakfast yet, they probably won’t be very understanding. Or, two, you could break the news at 10am after they’ve woken up, eaten, and had some coffee. Your bad news hasn’t changed. But, by sharing your news when your significant other is in a good mood, you are more likely to get a favorable reaction.

The same thing is true for stocks. For example, Disney and Microsoft are both members of the Dow Jones. This fact alone is enough to consider them both quality stocks to buy. However, let’s pretend that it’s April 1, 2020. The coronavirus pandemic just entered the United States and the entire country is about to quarantine.

Disney relies heavily on crowd-heavy events like theme parks, cruises, and film production. Due to this, its business is about to be stifled. On the other hand, Microsoft has an incredibly large cloud computing division. As companies will now have to do more business online, it is set to make a lot of money.

These are both great companies. However, the timing of the coronavirus pandemic made one a much better buy than the other.

With that said, let’s take a look at Disney’s stock.

Disney Q3 2021 Earnings Report

To get a good idea of whether you should buy Disney stock, let’s break down its most recent earnings report.

Disney released Q4 2021 EPS of $0.38. This was 23.41% lower than the $0.50 that analysts expected. It also reported Q4 revenue of $18.53. This was 1.24% lower than the $18.77 billion that analysts expected. However, it’s worth noting that $18.77 billion was a 26.02% increase from 2020. Disney also reported a Q4 net income of $159 million. This was an increase of 122% from 2020.

For fiscal year 2021, Disney reported annual revenue of $67.42 billion. This is fairly comparable to what it posted prior to the pandemic in 2019 ($69.61 billion). However, total net income has still not returned to pre-pandemic levels. In 2019, Disney posted a net income of $11.05 billion. In 2021, it posted a net income of just $2 billion.

Streaming Subscriber Growth Slowing

Since streaming is Disney’s newest business line, Disney+ generally receives a lot of scrutiny. In Q4 2021, Disney added just 2.1 million Disney+ subscribers. While this is still good, it was well below what investors were expecting. It’s also worth noting that Disney added an impressive 44.4 million subscribers in the past year. This was a 60% increase year-over-year. Due to this surge of new memberships over the past year, slower growth right now might not be that big of an issue.

Disney+ currently has 118.1 million subscribers. For comparison, Netflix has 214 million. Remember that Disney plus was started in 2019, compared to 2007 for Netflix.

Hulu showed improved results due to solid subscription revenue growth as well as higher advertising revenue. Since Hulu offers live TV packages, it has benefitted from the return of live sports and other events.

Disney also stated that all streaming platforms are starting to get overproduction bottlenecks. These bottlenecks are still left over from COVID-19 lockdowns.

Final Verdict: Should You Buy Disney Stock?

The decision on whether or not to buy Disney stock will always be a personal one. Disney’s stock returns have definitely disappointed over the past few years. It is also still struggling to recover from the effects of the COVID-19 pandemic. Investors were probably hoping that Disney’s numbers would rebound significantly, once the initial restrictions were lifted.

Instead, Disney has taken a very cautious approach. It decided to go with a slow re-opening, mask mandates, and limited park capacity. While this is good for employee and customer safety, it has not been great for short-term profits. This could be one reason why Disney stock has been underperforming.

Disney is also still experiencing bottlenecks from its film production business. Film production is not just something you can turn off and on. It involves months of casting, filming, editing, reshooting, and marketing. Due to this, it could very well take another year or so for Disney to get back on track.

With that said, Disney is still one of the world’s most popular companies. As a general rule of thumb, it’s a bad idea to bet against companies with loyal fanbases. In the coming years, there’s a good chance that Disney find its stride again. In 5-10 years, the years 2021 and 2022 might have been a great opportunity to buy Disney stock.

If you’re looking for additional information on the best stocks to buy and hold, we recommend signing up for the Liberty Through Wealth e-letter below. Market expert, Alexander Green helps investors find investment opportunities with the most momentum so you can build your wealth.

I hope that you’ve found this article valuable when it comes to learning whether you should buy Disney stock. As usual, all investment decisions should be based on your own due diligence and risk tolerance.

The post Fall 2021: Should You Buy Disney Stock? appeared first on Investment U.

Unfortunately, due to COVID-19, movie theater stocks are deeply in trouble. Box office grosses have plummeted to, well, not zero but not much better.

Disney is showing its hand: Streaming will be the future of movies. Theaters may survive but likely in a somewhat limited role. Here’s what’s going on with Disney and its stock.

Disney Investors Day Announcement Reveals Tons of New Content

Disney held its Investors Day meeting call on December 10. On the call, it discussed its slate of upcoming content development plans. And it is an exciting and massively impressive list of items.

Perhaps the most exciting and fanboyish group of new content centers around a slate of new Star Wars-related content. In the wake of The Mandalorian‘s success, it is no surprise that Disney is going full steam ahead on the Star Wars front.

But there is plenty of other content ahead, including some tied to major franchises like Marvel, FX and National Geographic. But where Disney is really going full steam ahead is with its one-year-old streaming service Disney+. And this may be the bulk of the stock’s value going forward.

According to Chairman and former CEO Bob Iger, who is now responsible for the creative direction of developing Disney entertainment content, the streaming platform will continue to focus on quality over quantity.

While the company plans to release some content in theaters in the future, according to Iger, approximately 80% of its future content will be going directly to Disney+ streaming.

The New Content Deeper Dive

More than ever before, incredible, high-quality original content is the key to streaming movie success for entertainment companies. And from the sound of it, Disney and Disney+ have quite a bit of great stuff coming up.

For instance, the slate is to include…

• Two new Star Wars projects from the creators the massively successful show The Mandalorian
• Kenobi, another new Star Wars show with both Ewan McGregor and Hayden Christensen reprising their roles from the prequel films as Obi-Wan Kenobi and Darth Vader, respectively
• A new Star Wars film by acclaimed celebrity director Patty Jenkins (Wonder Woman, Wonder Woman 1984) based on the popular video game concept Rogue Squadron
  
• Legendary Hollywood star Harrison Ford reprising his role as the daring adventurer Indiana Jones for a fifth film
• A slate of new Marvel Cinematic Universe (MCU) projects including Black Widow and Fantastic Four films based on the classic comic book characters.

With an upcoming slate of entertainment content like that, it may be hard for other entertainment competitors to keep up with Disney+. For example, AT&T‘s (NYSE: T) WarnerMedia, which seems to be having a problem keeping its talent happy this week…

The Movie Business’ Main Problem: The Box Office Theaters

As you can see, things seem to be moving along swimmingly for Disney+, especially on the streaming front. The light side of the force is strong with them.

And then you have the issue of WarnerMedia vs. Nolan: Dawn of Grievances.

In case you hadn’t heard, WarnerMedia recently announced that all box office films slated for release in 2021 will be simultaneously released on its fantastic streaming platform, HBO Max, for subscribers.

The Dark Knight and Inception director, iconic filmmaker and WarnerMedia golden boy Christopher Nolan had a thing or two to say about that.

The fallout from that may not be pretty for either (or both) Nolan and WarnerMedia. But in the meantime, both entities may need to face a stark new reality: Movie theaters may be nearly headed the way of the dodo bird.

Movies by the Numbers

While Disney+ and other streaming services continue to thrive, movie theaters have a problem. And we can see that pretty starkly in their revenues and stock prices.

The total gross of the domestic box office returns in 2020 are about $1.9 billion to date. For 2019, the total domestic box office returns were about $11.2 billion. That’s a drop-off of 82%.

So yeah, they aren’t likely to close that particular gap.

And while it is in theory possible that someday box office numbers will revert to pre-pandemic numbers and people will want to sit in massively crowded theaters elbow-to-elbow, eating stale popcorn and drinking a supersized soda while people cough all around them, I am far from convinced.

WarnerMedia is clearly preparing for big changes to last awhile – maybe permanently – in the entertainment industry. And, whether Christopher Nolan likes it or not, that’s just a reality directors and other artists will have to deal with.

Disney Stock and Movie Stocks

The success of the Disney+ platform and optimism about its future can be directly seen in investor sentiment. Disney is currently trading around $160, up from a low of around $80 at the time of the crash in March. That’s a 100% gain.

Meanwhile, AT&T’s stock has dropped this year from a high of about $39 to yesterday’s closing price of $30.42. That’s a year-to-date change of about -21%.

There’s far more going on with AT&T that’s responsible for its share price than its box office numbers, though. And I think HBO Max, with incredible content like the investment banking drama Industry and the sensational miniseries The Undoing, has a bright future ahead.

Nevertheless, the difference in investor sentiment between the two studios is quite clear. And that doesn’t even include AMC Entertainment Holdings (NYSE: AMC), which has plummeted 43% this year, from around $7.50 to yesterday’s closing price of $4.09.

The general consensus is pretty clear: The future of the entertainment industry is streaming services, not the box office – at least in the near term. And Disney+ stands to be one of the great beneficiaries.

Concluding Thoughts on Disney+ and Disney Stock

Disney+ looks to be the hit streaming platform of the near future. After all, that’s a whole lot of Star Wars they have coming. And Star Wars has meant big business since 1977.

If you like betting on the movies, you might want to consider a play for Disney stock. That said, always remember to use a position size calculator to keep your portfolio well diversified and poised for success without too much risk.

If you’re interested in learning more about which stocks will be great in the future, I highly recommend signing up for The Oxford Club’s Chief Investment Strategist Alexander Green’s free e-letter Liberty through Wealth in the subscription box. This investing guru shares his brilliant insights into the stocks you need to know to build wealth.

The post Disney+ Is Likely the Key to Future Stock Growth appeared first on Investment U.

I never thought we’d see a global pandemic of this scale. And for a while, I couldn’t see the light either.

But it’s the circle of life. Stocks rise and fall. Markets crash and are reborn.

And sometimes – amid all the panic – investors are able to pick up super-cheap shares of iconic, trailblazing companies…

Like The Walt Disney Company (NYSE: DIS).

And today, I’m going to explain why I think the House of Mouse is still a “Buy.”

Into the Unknown

I’ve learned a lot of valuable lessons since I started investing.

An important one is “Be prepared.”

So when the markets jumped off a cliff in March, I had a mental wish list of stocks I knew I wanted to buy at a discount.

Disney was one of them.

On March 16, I picked up shares at $95.04. That was 38% off their all-time high!
In a moment, I’ll explain why I jumped on the chance to buy the media giant.

But first, I’ll address why some analysts are afraid to wish upon this particular star.

Can’t Let It Go

The short-term outlook is bleak…

Five out of six parks and resorts are closed until further notice. A whopping 100,000 poor, unfortunate souls have been furloughed, and executives have taken salary cuts.

Cruises lie abandoned in ports.

ESPN has no new games to broadcast.

Expected box-office hits like Mulan and Black Widow have been postponed.

And – the icing on the cake – Disney’s dividend has been suspended.

So financially, things have been better.

Revenue still showed 21% growth year over year, but earnings fell 93%. Free cash flow fell 30% to $1.9 billion.

The Parks, Experiences and Products segment was the worst hit, reporting a 58% drop in operating income. The company reported a $1 billion loss in revenue in this segment thanks to COVID-19.

You’ll need more than a spoonful of sugar to help that go down.

Disney isn’t out of the woods just yet, but it has put extensive cost-cutting measures in place to minimize the carnage in its fiscal third quarter.

The Only “Plus” to Being Quarantined

Park profits may be suffering, but Disney’s Direct-to-Consumer & International segment nearly quadrupled in its last report. Segment revenue came in at $4.12 billion.

As of the start of May, the company’s streaming service, Disney+, had 54.5 million paid subscribers. This is hypergrowth in action!

Originally, Disney’s goal was to reach between 60 million and 90 million paid subscribers by 2024. It will likely hit the low end of that goal by the end of the month… four years early!

Not to mention, Disney+ has a huge catalyst on its horizon…

Wait for it…

Just two days ago, we heard that Hamilton will be released to Disney+ on July 3.

The filmed version of the Tony Award-winning musical was originally set to hit theaters in October 2021. But the pandemic has introduced a heightened need for at-home entertainment.

If this isn’t a “making lemonade out of lemons” situation, I don’t know what is.

Won’t You Be Our Guest Again?

Thankfully, the lights are coming back on in Cinderella’s castle.

This Monday, Shanghai Disneyland reopened after a 15-week shutdown. And per Chinese government guidelines, it’s bare necessities only.

Parades and fireworks displays, which would cause crowding, have been canceled. The park has also shut down interactive children’s play areas and live shows.

Rules and procedures are in place for mandatory masks, temperature screenings and social distancing.

Still, tickets sold out in just minutes.

According to CEO Bob Chapek, Disney plans to increase park capacity by 5,000 people each week until it hits the 30% limited capacity figure set by the government.

“We’re going to see how it goes,” Chapek said. “This is a first step, it’s a baby step, but we’re very encouraged by what we’re seeing in Shanghai.”

Hakuna Matata…

It means no worries. So worry, I won’t.

For some perspective, let’s look at a bird’s-eye view of Disney stock since inception…
In short, we are nowhere near panic territory.

Plenty of companies out there don’t have the resources to survive this pandemic. They didn’t adapt to the digital world fast enough… or their model has been deemed obsolete by the changing tides of the pandemic.

But Disney is not one of them.

Besides, my professional, technical, data-derived analysis is this…

It’s freaking Disney.

The behemoth owns ESPN, Hulu, Marvel, Twentieth Century Fox, National Geographic, Pixar, ABC and Lucasfilm… not to mention Disney Music Group, Hollywood Records, Walt Disney Studios, Mickey Mouse and dozens of other household names and franchises.

This giant isn’t going anywhere.

That’s why I’m confident Disney is still a “Buy.” And I believe it will recover from the 2020 slump that the global economy is suffering through.

So I’ll keep picking up shares of great companies while they’re massively discounted. That’s the ultimate benefit of corrections, crashes and recessions.

It’s a tale as old as time.

Good investing,

Rebecca

The post Is Disney a “Buy” Right Now? appeared first on Investment U.

The coronavirus has disrupted many industries, and the House of Mouse isn’t exempt. Disney is a diversified media giant with products like Disney+ streaming, which has seen a sales bump. But other products, like its theme parks, have shut down completely. That’s a big loss of revenue.

To stay in a position of financial strength, management is making tough decisions. The recent dividend cut is hopefully temporary. For more insight, let’s take a closer look at the business. Then, after that, we’ll dive into past dividend trends.

The post Walt Disney Suspends Dividend and Cuts History of Growth appeared first on Investment U.