Disney Stock: Buy Or Bye?

Investing in Disney is a divisive topic. Some believe that Disney is facing challenges such as expensive streaming endeavours, waning park franchises, and fierce competition. However, others see potential in the company's strong assets like Disney+ and theme parks. The company's performance has been mixed, with a successful streaming service launch but slow subscriber growth. Disney's parks and cruise businesses are recovering, but the company needs to balance streaming and in-person revenue. Overall, whether investing in Disney is a smart move depends on each investor's patience and timeline.

Disney's parks and experiences

Disney Parks and Experiences, commonly known as Disney Parks, is one of the three major divisions of The Walt Disney Company. It was founded on April 1, 1971, exactly six months before the opening of Walt Disney World. Led by Josh D'Amaro, the company's theme parks have hosted over 157.3 million guests, making Disney Parks the world's most visited theme park company worldwide.

Disney Parks and Experiences is one of the world's leading providers of family travel and leisure experiences, with six resort destinations across the globe, including 12 theme parks, 55 resort hotels, a top-rated cruise line, and other unique vacation experiences.

Disney's cruise business is also experiencing a strong recovery, with its ships seeing bookings ahead of their historical rates, even with increased prices and social distancing protocols. Disney debuted a new cruise ship in June 2022 that was almost 90% booked for its inaugural season.

Disney continues to invest in its theme parks, leveraging its most popular stories to create unforgettable, immersive experiences for guests. For example, 'Tiana's Bayou Adventure' opened in June 2022 at Walt Disney World Resort, bringing to life the popular story of 'The Princess and the Frog'.

Disney's streaming services

Disney Streaming, formerly known as BAMTech Media, is a technology subsidiary of The Walt Disney Company. Disney Streaming provides Video on Demand technology, particularly for Over-the-top media services (OTT).

Disney Streaming has developed two subscription streaming services aligned with Disney properties: ESPN+ and Disney+. ESPN+ is a sports-oriented service, while Disney+ is a global family entertainment service.

Disney+ was launched in November 2019 in the United States, Canada, and the Netherlands, and has since expanded to other countries. The service primarily distributes films and television shows produced by Walt Disney Studios and Disney Television Studios, with dedicated content hubs for Disney's flagship brands, including Pixar, Marvel, Star Wars, and National Geographic.

Disney+ has been well-received due to its pricing and the extensive Disney library. As of January 2021, Disney+ had 94.9 million subscribers worldwide. In August 2022, it was announced that the combined total of subscribers across all Disney streaming platforms, including Disney+, Hulu, and ESPN+, had surpassed Netflix, with roughly 221 million subscribers.

In summary, Disney's streaming services, particularly Disney+, have shown strong performance and growth. The services provide a wide range of content, leveraging Disney's extensive portfolio of brands and intellectual property. While there have been some challenges, Disney's commitment to the streaming business and its strong brand position it in a good place for the future.

Disney's brand strength

The Disney brand is easily recognisable worldwide, with its logo and name associated with high-quality, family-friendly entertainment. This reputation has been cultivated over more than 90 years, with particular recognition for its Disney Channel, Disney Park resorts, and movies from Walt Disney Studios. In 2016, Disney was named the world's most powerful brand by Brand Finance, a leading independent brand valuation and strategy consultancy.

Disney's brand value is estimated to be $61 billion, ranking it 7th on Forbes's list of the world's most valuable brands. The company's impressive portfolio, diverse offerings, strong negotiation skills, and creative teams all contribute to its brand strength. Disney's reliability, with strong ties to high-quality suppliers, and its large cash flow enabling additional investments, further enhance its brand power.

Overall, Disney's brand strength lies in its ability to create and acquire magical, family-friendly content and experiences that resonate with audiences of all ages worldwide. This brand strength is a key factor in the company's success and resilience, making it a smart long-term investment for those with the patience to weather any short-term challenges.

Disney's recovery from the pandemic

In March 2020, Disney's executive chairman Bob Iger announced that he would forgo his salary during the pandemic, while chief executive Bob Chapek took a 50% pay cut. The company's stock fell 28% on April 20, 2020, and it was forced to close its theme parks, suspend cruises, and delay movie releases.

However, Disney's streaming service, Disney+, reached 73.7 million subscribers within a year of its launch in November 2020, and Hulu, which it owns, had 36.6 million customers. Disney+ had an unexpectedly strong debut, reaching 118 million subscribers at the end of the last quarter.

Disney's parks and experiences are recovering slowly. In November 2021, the company reported improved earnings for the fourth quarter and fiscal year 2021, the first such report since the pandemic began, with all its parks open for the entire quarter, albeit with reduced capacity. Revenue from parks, experiences, and products increased 99% year over year to $5.4 billion, and operating income came in at $640 million, up from a loss of $945 million in Q4 2020.

The cruise business is also experiencing a strong recovery, with ships seeing bookings ahead of historical rates, even with increased prices and social distancing protocols. However, it is important to remember that the pandemic is not over, and cruise ships continue to see coronavirus cases despite added safeguards.

Disney's full recovery may take more time, and new variants could rapidly change the outlook for the company. However, Disney stock is considered a smart long-term investment, as the strength of the business is expected to see it through these challenging times.

Disney's financials

As of 2022, Disney's theme parks are seeing a slow recovery, and their cruise business is experiencing a strong rebound, with bookings ahead of historical rates despite increased prices and social distancing protocols. Disney+ subscriber growth has slowed, but the service still has a large subscriber base.

Disney's fourth-quarter and fiscal year 2021 earnings report showed promising results, with revenue from parks, experiences, and products increasing by 99% year-over-year to $5.4 billion. Operating income also improved, turning a $945 million loss in Q4 2020 into a $640 million profit in Q4 2021.

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