The company’s direct-to-consumer arm lost $216 million during the fiscal 2024 first quarter (ended Dec. 30). There’s a great, big, beautiful tomorrow for Disney and its shareholders. You can confidently fill your portfolio with Disney shares by the bucket.
James Brumley has no position in any of the stocks mentioned. For example, it’s possible the planned $7.5 billion of cost cuts expected to be completed by the end of this year could prove more harmful than beneficial by crimping the company’s ability to attract paying customers. There’s also no denying the ongoing cable cord-cutting movement is working against Disney — a headwind that may not be fully offset by the intended 2025 launch of a standalone streaming version of ESPN. Then, there’s its incredible catalog of film classics ranging from Snow White and Sleeping Beauty to more modern franchises like the aforementioned Avengers and Star Wars series. Even Trian believes Disney has “unparalleled assets and opportunities and every reason to grow and prosper.” It just hasn’t been using capitalizing on them all that well of late. The past three years have been challenging ones for Walt Disney (DIS -0.71%).
- Disney stock has been a part of six stock splits since the IPO,The first post IPO stock split happened in 1967 which was a 2 for 1 stock split.
- The media giant’s latest movies have been subpar, and its film business has also regularly been unprofitable.
- It can take months to shoot a film and then many more months to edit and finalize it.
- The two parties simply have a different vision about how that should happen.
- A month later, Disney stock price dropped below $30, which was a year to date low.
But waiting until they’re completely resolved could mean missing out on the bulk of any brewing recovery for the stock. When Disney first launched its flagship streaming service Disney+ back in 2019, profits weren’t a concern. The media giant’s first goal was establishing market dominance. Making the platform profitable would be something for down the road.
After the first-quarter report in February, Disney shares fell and started a long downward trajectory after the second-quarter update in May. August’s third-quarter filing did spark a 5% jump the next day, but even that bounce was erased a couple of days later. All of this negativity rolled in even though Disney delivered three rock-solid reports.
Ditto for shareholders; the stock’s still down more than 40% from its early 2021 peak. Share prices have fallen 2% year-to-date, missing out on a 19% https://www.topforexnews.org/news/hammer-candlestick-formation-in-technical-analysis/ gain for the S&P 500 market barometer. If you had invested $1,000 in Disney’s IPO your stock today would be worth over 3 million dollars today.
Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. For example, you can find Buzz Lightyear in theme park rides, themed hotel rooms and cruise ship cabins, video games, books, lunch boxes, and t-shirts. Multiply that effect by an ever-growing portfolio that currently stands at roughly 8,000 characters, and you’ll see why I’m so impressed by Disney’s money-making abilities.
Profit margin
These losses are shrinking though and will likely continue doing so. The stock is trading at lofty valuation ratios such as 283 times trailing earnings and 228 times free cash flows. Surely that’s too rich, even for a media titan with nearly a hundred years of history and its eyes on an increasingly digital entertainment market. The business is built on a foundation of storytelling in several well-known worlds of rich characters. From fairy-tale Disney Princesses and diverse Pixar tales to Marvel’s superheroes and the Star Wars galaxy far, far away, Disney has a plethora of celebrated story worlds under its belt. And once Disney gets its four-fingered gloves on a fictional property, it has also mastered the art of monetizing this intellectual property.
Those inflexible metrics are coming back to earth over time as Disney continues its recovery and tackles the media-streaming market like only a massive mouse in red shorts and Affordable blue chip stocks yellow shoes can. This underlying improvement is partially the result of cost cutting. But future progress will also reflect a more optimized mix of streaming services.
DIS vs Entertainment Stocks
Walt Disney Co. reported Q1 profit that fell substantially short of analysts’ expectations which sent the stock price to a 10% decline in after-hours trading. Putting Disney’s stock price in the $15 territory, a long way from a previous all time stock price high around $43. Therefore, I would warmly recommend buying Disney shares despite the sky-high price-to-earnings ratio.
There were two more 2 for 1 stock splits shortly after in 1977 and 1973. The next stock split happened over a decade later in March 1986 when a 4 for 1 stock split took place. The 90s brought two more stock splits, one 4 for 1 in 1992 and then a 3 for 1 stock split in the summer of 1998. All these stock splits work out as 1 share purchased at IPO being the worth 384 shares today.
Walt Disney Company Company Profile
Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation. Disney stock has been a part of six stock splits since the IPO,The first post IPO stock split happened in 1967 which was a 2 for 1 stock split.
Disney’s stock price dropped nearly 70% of its price value in the near 2 year period between late 2000 and late summer 2002. Which outpaced the drop of many other non-tech stocks which fell about half the amount during that time. On balance though, for the first time in years, there’s good reason for investors to be cautiously bullish on this stock. Disney’s management has identified its problems and launched solutions to fix them.
It’s still not entirely clear what that means in practical terms. It can take months to shoot a film and then many more months to edit and finalize it. The films being released right now are still largely those that were started under Iger’s predecessor. Four arguments stand out as reasons to take a swing on Disney stock sooner rather than later, before the recovery rally makes any more progress.
Is Walt Disney Stock a Buy Today?
The company crushed Wall Street’s earnings targets in all three periods and also exceeded analyst targets for the top line in February and August. Moreover, the Disney+ video-streaming service is growing like gangbusters, and theme parks are already back to positive operating profits. The stock has seen more than its fair share of volatility in recent months. Disney’s shares are trading https://www.day-trading.info/developer-jobs-cheat-sheet-for-beginners/ 52% above November’s 52-week lows but also 12% below the all-time highs of early March. Prices have generally followed the broader market’s daily trends, amplified by the business promise investors see in a post-coronavirus entertainment industry. Curiously, Disney’s earnings reports have broken that connection all year long — and not in a positive way, for the most part.
All of these terrible trends have started to reverse thanks to the ubiquitous availability of coronavirus vaccines in 2021, as shown in the rising revenues and recovering operating profits. Yet, at the same time, the stock has been hung out to dry, slowly losing value even though the underlying business is improving. Prior to the pandemic, Disney’s film business was firing on all cylinders. In retrospect though, it appears the success was more about the franchises and intellectual property — Star Wars and Marvel’s Avengers — than the filmmaking itself. The media giant’s latest movies have been subpar, and its film business has also regularly been unprofitable.
