Investors in Walt Disney (NYSE:DIS) are excited. The media conglomerate’s stock price has risen for five straight trading days, increasing by 16%. Disney’s near- and long-term prospects are bright after the company released a stellar earnings report last week.
The kind of role reversal makes a lowly maid the center of attention, like Cinderella’s glass slipper. As of early last week, Disney (NYSE:DIS) stock had the poorest year-to-date performance of any Dow 30 component. It may be the most attractive investment opportunity in the widely tracked index.
A Disney Stockholder’s Dream Is a Wish With Legs.
Disney’s fiscal third-quarter report last week showed a lot of promising trends. Fiscal Q2 ended on July 2. The 14.4 million new subscribers Disney+ received in Q2 were the service’s highest quarterly net gain in the last six. The company’s domestic theme parks are booming, with attendance up 20% and revenue per visitor up 40% from the last fiscal year before the epidemic hit. The media giant is also raising pricing for all three of its premium streaming services later this year; in some instances, the increases are pretty significant. That really puts the “plus” in “plus.”
The media conglomerate’s stock price is rising, and deservedly so. The stock price did not yet recover to the level last year, but it is trending in the right direction. Thirty months after Bob Chapek was announced as Disney’s new CEO, the stock is roughly where it was then, but this isn’t a meaningless circle.
The company has improved recently. Because of adjustments to its revenue model, the value of each visitor to the theme park has increased by 40%. Three years ago, in the company’s fiscal third quarter, all of Disney’s media networks brought in only $6.7 billion in sales. These linear networks now bring in $7.2 billion annually, with premium streaming adding another $5 billion.
Disney’s recent social and political initiatives have polarised some of its followers, and it’s fair to argue that you don’t have to enjoy everything it does to disagree with them. However, the rising stock price is difficult to dispute.
Obviously, there is a lot of room for error. The increasing prices of Disney+, Hulu, and ESPN+ may cause some subscribers to recoil. Any severe economic downturn worldwide could derail Mickey and Minnie’s speeding train to profit. What would happen to linear networks if their advertising revenue dried up in addition to the gradual loss of viewers from cable and satellite television? The movies are back in our lives, but Disney isn’t the biggest moneymaker this year.
Disney (NYSE:DIS) is a complex machine with numerous moving parts. Not everything has to go perfectly for it to work. On the other hand, the media company can’t have too many problems all at once. You can’t just turn back the clock and expect things to be where it was before you started. All is good at the royal ball. Keep the clock from striking twelve.
Featured Image: Megapixl @Chrisdorney
Author Shariq Khan 
