From Mickey Mouse and Donald Duck to Moana and Elsa, the Walt Disney Company has been a mainstay of American culture for generations. The company was originally founded in 1923 by Walt and Roy Disney, establishing itself as a leader in animation and children’s films prior to expanding into theme parks, live-action films, and mass media. Today, the Walt Disney Company (DIS) is a diversified international mass media enterprise, operating through a variety of well-known ventures like Pixar, Disney Parks, ESPN, and 20th Century Studios. In 2019, the Burbank, California based company generated $23.3 billion in gross profit on $69.4 billion in revenue, employed over 200,000 individuals, and maintained a 15.93% profit margin.
With its ubiquitous cultural influence, massive media network, and profitable merchandising operations, Disney has historically been a rewarding investment for long-term investors. Shares of the company have outperformed the S&P 500 consistently over the period since early 2009, despite suffering relatively sharp COVID-19 related declines in early 2020.
Revealingly, in early August 2020, Disney reported its first quarterly loss since 2001, citing a 42% drop in quarterly revenue as the company felt the impact of quarantine-era policies that have hamstrung key segments of the business like theme-parks, live sports, and movie distribution. However, Disney+, ESPN+, and Hulu the company’s content streaming platforms remain a bright spot for Disney, charting significant subscriber growth as customers remain quarantined. Strong content streaming subscriber growth has been enough to keep investors interested in Disney’s shares, which have continued to recover value after falling from their November 2019 highs.
A look at Disney’s EEON stock ratings paints a descriptive picture of the company’s current operational outlook and predicament. Disney’s growth, value, profitability, and scalability ratings have all been pummeled by the recent poor performance of the business, however, its momentum score has remained relatively strong as investors prioritize subscriber growth in Disney’s streaming services. Held against rising share prices, this dynamic illustrates the enormous value investors place on subscriber growth in the content streaming era.
Moving forward, Disney’s future as a profitable investment vehicle depends on three key factors. First is the company’s ability to resume operations in its theme park, live sports, and film distribution business segments, which have all been significantly affected by the ongoing coronavirus pandemic. An expedient return to these core business segments would boost Disney’s investment value. Second is continued growth in Disney’s subscription streaming services Disney+, ESPN+, and Hulu. Faltering growth in subscriber counts attributable to students returning to school or an easing in quarantine restrictions would likely precipitate a negative move in the price of Disney shares. Lastly, Disney’s performance will be strongly influenced by the leadership and direction of Bob Chapek, who took over as CEO of the Walt Disney Company in February of 2020. Although Disney’s previous CEO Bob Iger will remain executive chairman of the company through 2021, Chapek’s ability to lead the company through a volatile time in the organization’s history will either inspire or disappoint engaged investors.