Disney(NYSE: DIS) It released its first quarter revenue on Wednesday morning, with the market responding loudly with “Meh.” After opening with a short pop, the stock quickly fell, falling about 1% for most of the session.
There are so many obvious competitive advantages in the stock market as stocks have essentially been flat in the past decade, but so many obvious competitive advantages.
Some investors believe Disney is finally turning the corner after years of overwhelming returns. After all, its streaming business is currently profitable and owns Hulu entirely. We also plan to launch the flagship ESPN streaming service in the fall.
Given the recent performance of assets and streaming leaders, stocks certainly have the potential Netflixshows that Streaming Market It may be even bigger than investors believed.
However, there are three things Disney needs to demonstrate before persuading the path to growth.
Image source: Disney.
Disney has managed to make its streaming business profitable, but growth remains a problem. In the quarter when Netflix added nearly 20 million subscribers to its streaming service, Disney lost 700,000 people to Disney+ and added 1.6 million to Hulu. Also, the price increased, streaming revenues rose during the quarter, even with minimal subscriber growth.
Last year’s Disney record is even more impressive as it added 13.3 million subscribers to Disney+ in the last four quarters, but that number could have been boosted by a new bundle with Hulu. We have also added 3.9 million subscribers to Hulu.
Disney’s streaming strategy has long appeared confused. In comparison, Netflix has been hoping to offer a wide range of video entertainment options for years, so there’s something for everyone.
The value proposition with multiple Disney options seems unclear. By owning Hulu completely, Disney gives the opportunity to combine and merge the two services, making the customer experience simpler and means they have to promote and find programming for one service. The current bundles can feel clunky and unnecessary, and Disney seems poised to make similar mistakes fubo Hulu + Live TV holds them as separate services rather than combining them.
That streaming proposition can become even more troubling as it appears to be poised to own at least four separate streaming services once ESPN is launched.
The recent slides of Disney submarines may be blips, but we want to see steady growth from the segment that appears to represent the company’s future.
The biggest bright spot in Disney’s first quarter report was its performance at the box office. Mainly thanks to its success, it reversed the losses in its content sales/licensing business to a profit of $312 million to a profit of $224 million. Moana 2 and Mufasa: The Lion King.
Like a tent pole franchise production Moana It is the biggest key to Disney’s flywheel business model. The success of these films will help drive theme park visits, purchase products such as toys and subscriptions to streaming services.
Disney paid $71 billion for Fox Entertainment in 2019, struggling to get the value of their money. Getting the box office with that intellectual property or something is the best way to get it paid off.
Theatre releases also have a lot of leverage. Hits can make a big profit, but busts lose money. Not all movies are hits, but Disney should generate solid profits from content sales and license segments quarterly.
It’s a brave new world for ESPN. The advantage of the company’s cable ecosystem has declined during the streaming era, and now faces competition from traditional media companies as well as high-tech giants.
Meanwhile, sports content prices continue to rise due to the popularity of live sports and competition from deep pocket tech giants.
Launching the ESPN flagship service later this year will be a key test for the company. Not only does Disney need to attract a significant audience to ESPN, it also needs to show that it can make money and grow that profit. To do this, ESPN may need to regain its roots and connect with audiences through studio programming Sports Center In addition to live sports.
Disney’s future may be more dependent on ESPN than anything else. This has long been a valuable cash cow for the company, and its decline has been the main reason for the stock struggle over the past decade.
Although there is no answer for at least a few quarters after its launch, its success is a key factor for CEO Bob Iger, who is planning to retire next year.
Disney guidance requires high-digit revenue growth of single digits per year. This is fine, but it’s not enough to excite investors. When a company runs on all aspects of its business, it can increase profits much faster than that. That possibility is still there, but Disney needs to offer it in the three areas mentioned above.
Think about this before buying stocks at Walt Disney.
Motley Fool Stock Advisor The analyst team has identified what they believe 10 Best Stocks For investors to buy now…and Walt Disney wasn’t one of them. The 10 stocks that have made the cut could potentially generate monster returns over the next few years.
When should you think about it? nvidia I created this list on April 15, 2005… If you invested $1,000 at the time of recommendation, There is $795,728! *
Now it’s worth notingStock AdvisorThe total average return rate926% – Market-breaking outperformance compared to175%For the S&P 500. Don’t miss our latest Top 10 list.
Jeremy Bowman There are positions at Netflix and Walt Disney. Motley Fool has been working and recommending Netflix, Walt Disney and Fubotv. To Motley’s fool Disclosure Policy.
To provide the best experiences, we use technologies like cookies to store and/or access device information. Consenting to these technologies will allow us to process data such as browsing behavior or unique IDs on this site. Not consenting or withdrawing consent, may adversely affect certain features and functions.
Functional
Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes.The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
