Disney’s Stock Might Be A Good Investment Right Now And Here’s Why
Disney has been doing quite well in the stock market over the past few years courtesy of strong returns from its numerous assets. The past 10 years have particularly been exciting as far as growth is concerned ever since it acquired Marvel Studios in August 2009, which has gone on to become Disney’s biggest asset.
Marvel’s impact on Disney’s growth
Marvel has churned out an impressive lineup of high revenue films over the past decade or so. The movies leading up to Avengers Endgame. Some believe that the end of that build up means that its downhill from there. However, that is not the case. Marvel remains one of the most important chips that Disney is holding and it still has a robust lineup of films and TV shows that will be released over the next few years.
Marvel is also gearing up to enter the next phase of its superhero films and it already has a strong history of delivering epic films and thus there is a lot to look forward to. If the company can maintain the momentum, then it will likely continue to add value to Disney and its stock value.
Disney has a massive offering beyond Marvel
Disney already has a strong portfolio of offerings other than the content that s made by the Marvel franchise. Disney’s rich content offering consists of many TV shows and films. The company has particularly been investing heavily in making live-action reboots of classic animated films with the latest one being the iconic movie, Lion King.
The focus on content has been a critical part of ensuring continued success and Disney’s financial muscle means it can produce highly appealing content. This explains why the company also owns the Star Wars franchise which is also a powerhouse as far as revenue is concerned. Star Wars films are well-knit into the fabric of pop culture thanks to their popularity when they originally came out.
This decade has been an important one for the return of the films and the good thing is that they still have a massive fanbase. For example, the Star Wars: The Force Awakens made its debut in 2015 and its gross earnings came in at around $2.06 billion. This was a huge win for the film, fans and for Disney considering that the gross budget for the film was about $306 million.
Star Wars: The Last Jedi was also a mega box office success with its gross revenue coming in at $1.3 billion. The good news is that there are more Star Wars films in the pipeline and also other blockbusters that the company is expected to release in the next few years.
What Disney’s impressive size means for investors
Judging by its pipeline alone, Disney does not look like it will slow down anytime soon. The robust pipeline of films and TV shows especially with the high net worth franchises leading the charge means that investors should expect strong revenue figures in the future. This will also translate into noteworthy stock growth.
Disney’s overall gross revenue in 2018 was $7.325 billion in 2018 with about $3.09 billion from its domestic market in the U.S and $4.23 from the international market. These impressive revenues allowed the company to secure the top spot in the global box office studio rankings in 2018. It managed to outperform other major production companies such as Warner Bros, Universal, Sony and 20th Century among others.
Disney is committed to maintaining its lead and this means that investors will be in for a treat as the company seeks to generate more investor value.
Competition from Netflix and other streaming services
The rapid rise of content streaming services such as Netflix, Amazon, and Hulu over the past few years has been a major for Disney’s investors. Streaming has become a popular method of consuming content and a major threat to cable companies, as well as traditional content creators including Disney.
Netflix’s original content strategy played a key role in its rapid come-up, but it still has a long way to go before it can be considered a major threat to companies like Disney and Universal Studios. These major studios are miles ahead of streaming services as far as content is concerned and that is a major factor since content is king in this case.
Disney is recognizing the need to venture into the streaming industry
Although streaming companies are currently not that big of a threat to Disney, they have so far proved that there is a huge revenue opportunity in the content streaming market. To that end, Disney has been developing its content streaming platform called Disney Plus which will be launched in November this year.
A Disney Plus will reportedly cost $7 per month which means that it undercuts Netflix’s base monthly subscription cost of $10. There are plenty of reasons to be excited about the upcoming platforms. For example, it will likely feature all the content that exists under Disney’s ownership, which means that consumers will get to access a huge variety of content for a fair monthly fee.
Disney is also reportedly planning to invest millions of dollars into the development of original content for its upcoming streaming platform. A recent press release also revealed that all of Marvel’s future movies will exclusively be available on Disney Plus and not on Netflix. This makes it a huge bargain for consumers and also a huge threat to other streaming services.
If all goes as planned, Disney Plus will likely play in the big leagues as far as streaming is concerned. This is also great news for investors considering that it might contribute greatly to Disney’s growth and annual revenue.
All this means that Disney is currently an attractive buy for investors because it’s content lineup and key developments such as the venture into streaming content will generate massive value in the future. However, the earlier that investors get in, the better before the stock becomes overvalued.