DIS closed at $106.03. A lot has been made over COVID-19’s impact on the most well known part of Disney’s business, theme parks, but the most interesting part of their business today is their new streaming product Disney+.
As a parent of two young kids, I have quickly fallen in love with this product which is a significant improvement, though not necessarily a replacement for, the Disney movie club. Disney+ launched in November of 2019 and is currently available in only the United States, Canada and Netherlands. The service recently passed 50M subscriptions and is primarily responsible for keeping DIS stock price afloat.
Disney has a market cap today of 192B. Compare this to NFLX which has a market cap of 182B and and 170M subscribers. NFLX has years and years of first mover advantage, but is facing competition from Amazon’s Prime and Hulu, also owned by Disney, which has 30M subscribers. Add in ESPN+, also owned by Disney, and its best to think of the compliment of Disney+, Hulu and ESPN+ as the direct competitor to Netflix. Disney thinks so themselves, as they offer a bundle of these three services for $12.99. The idea here, and my belief, is that this bundle will grow to be as big as Netflix.
Netflix has streaming, a DVD mail in business, and some success with original programing. The Disney bundle alone can get to where Netflix is, before we add in the strength of Disney’s existing brands: Disney princesses, Marvel, Star Wars and ESPN. Once Disney+ gets rolling and new shows like the Star War’s critically acclaimed (and more importantly, fan loved) spinoff The Mandalorian are developed, the target demographic for the product will expand greater than just parents with young kids, which is key to keeping subscribers once their kids grow older. Add in the core part of Disney’s business: theme parks, merchandise hotels, etc., and Disney is going to be a powerhouse moving forward.
I will add a chart to this post soon, but I like an entry here at $106 and all the way down to the recent lows of $85. This is a long term, ten year buy and hold. Price Target: $212 a 100% ROI.
theDCal 