Where Your Investment Dreams Come True
Updated August 2024
Market/Symbol
NYSE:DIS
Price
$90.551.4%
Market Cap
$164b
PE Ratio
0
Average Volume
11m
Pricing delayed 2 hours. Sep 16, 2024 5:00 AM
Investment thesis
Invest in the Walt Disney Company
The Walt Disney Company is a multinational mass media and entertainment conglomerate. Disney's century-long legacy of storytelling and innovation has created unparalleled brand recognition thanks to its iconic characters and stories, whose audience spans generations. Disney has significantly expanded its portfolio through acquisitions, including Marvel Entertainment, Lucasfilm, and 20th Century Fox, further solidifying its position as a leading entertainment conglomerate.
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“The fact that Disney+ endures and has grown and has become more profitable is evidence of the durability of that brand, that content offering, and its appeal.”
Matthew Ball
Media and entertainment
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WHAT THE PRO’S ARE ASKING
Here are the questions that professional investors are asking before making an investment decision.
Disney generates revenue through its three main business segments: Entertainment, Sports, and Experiences. Experiences generate around half of Disney's revenue and includes parks, resorts, cruise lines, and a vacation club. Most of the revenue from this segment comes from admission sales, food, merchandise, and resort stays. The entertainment segment can be further divided into Direct-To-Consumer (e.g. Disney+)) and Linear Networks (domestic and international cable networks). The sports segment encompasses the sports-focussed television and DTC content. Disney's business model is highly scalable because a success in the entertainment segment can be made into experiences which can generate further revenue.
The release of Inside Out 2 in 2024 earned more than $1.5bn at the global box office, making it the highest-grossing animated film of all time. Deadpool & Wolverine opened to an incredible $444 million globally, making it the biggest opening weekend for an R-rated film ever, and it has grossed more than $1bn since its release on July 25th, 2024. In 2023 Disney’s management set a target to render its streaming business profitable by Q4 2024, a goal that they achieved early with Disney+, Hulu, and ESPN+. In 2023, Disney’s parks and experiences division was the company’s best-performing segment, generating $32.6 billion in revenue. That represented 36% of the company’s total revenue but 70% of its operating income.
Disney+ was launched in November 2019 and amassed 100 million subscribers within 2 years – surpassing its own guidance and target of 60 to 90 million users by 2024. By comparison, it took streaming market leader Netflix roughly a decade to reach the 100-million-mark, despite having navigated a much less competitive market then. Disney+ is now second in terms of global subscribers with many analysts believing Disney could reach streaming margins of 25-30%, potentially better than Netflix.
Declining global economic conditions can lead to reduced demand and therefore reduced revenue. In the last economic decline, there was reduced attendance at Parks and Resorts, a reduction in purchases of advertising on Disney's cable channels, and lower merchandise sales. Inflation can also increase Disney's costs of goods and labour. Disney's revenue is highly dependent on meeting consumer tastes and preference. If content released by Disney fails to be accepted by audiences, revenue will take a hit and consumer tastes can be unpredictable. In the same vein, if Disney's resorts and parks fail to meet visitor's expectations, their reputation will be damaged. Issues relating to intellectual property protection can reduce revenue. The expiration of copyrights, unauthorised use of IP, and challenges from third parties, along with the evolving legal landscape for new technologies (AI etc.), pose significant risks to Disney's IP protection and enforcement efforts.
Disney's 2023 Sustainability and Social Impact report shows its efforts in meeting their corporate social responsibilities. The company over performs all of its industry peers in ESG metrics. To highlight some of their achievements, Disney has granted over 155,000 wishes in partnership with the Make a Wish Foundation, granted $7m in grants via the Disney Conservation Fund, and diverted 61% of operational waste from landfill and incineration. Additionally, the Disney Aspire programme pays for the tuition of more than 15,000 eligible hourly wage employees to aid career progression. The company has goals for water stewardship, waste reduction, sustainable construction design, and use of more sustainable materials in its products.
Team
Kristina Schake
Chief Communications Officer
Appointed by Biden to run the national COVID-19 vaccination campaign and has served in the highest levels of government including being Communications Director for Michelle Obama. In her role as Disne...
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