Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
The COVID-19 pandemic has had a significant impact on businesses worldwide as millions were forced into lockdown. Because of this, many firms had to either shut down, furlough their workers, or change their operation strategy. According to an August 5, 2020 report, Disney is being forced to focus more on the streaming arm of their business due to the pandemic.
Disney Focuses on Streaming to Save Stock Price
Due to lockdown measures, Disney has been unable to operate its theme parks, cruise lines, and live productions. Recent financial reports from the company show that it has lost almost $5 billion in the last quarter. On top of this, its European linear television channels have been negatively affected.
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The company has seen some growth, however, mainly with their streaming service Disney+. The service was launched in late 2019 and has since surpassed 60 million users.
This success might now be the secret to the company coming out of the pandemic with minimal losses. While COVID-19 initially shook the stock market, many stocks have already recovered.
According to Disney Chief Executive Bob Chapek, the company will heavily leverage the streaming service’s recent success. One of the major moves in this regard is the release of their live-action Mulan film onto the service. It had initially been planned as a cinema release but will now be offered as a $30 pay per view option on September 4, 2020.
There are also plans to release a streaming service overseas. In regions where cinemas are opened, the film will be released to the theaters. For those regions with closed cinema facilities, a similar price will be charged for at-home viewing.
Chapek stated recently that this move will not only allow audiences to view the film at home but will also enhance the value of Disney+ subscription. The proposed international streaming service will be available under Disney’s Star brand and is to launch in 2021. It will also offer Disney-owned content from ABC Studios, Fox Television, FX, Freeform, 20th Century Studios, and Searchlight.
Is Disney Stock a Good Pick Right Now?
The news of the upcoming streaming service seems to have sat well with investors. Despite the reported losses for the last quarter, the company’s stock rose by 5% following the announcement. According to Refinitiv, Disney’s reported revenue is $11.78 billion, vs $12.37 billion that was expected.
Its total loss can be partially attributed to the acquisition of 21st Century Fox, as well as expenses associated with severance and contract termination costs and integration expenses. This new wave of optimism has certainly boosted the reputation of the company’s stock.
Guggenheim Securities analyst, Michael Morris, for instance, raised his stock rating from “neutral” to “buy”. He also boosted his price target for Disney stock to $140 from $123. Another analyst, Credit Suisse’s Douglas Mitchelson, upgraded the stock from “neutral” to “outperform”.
Furthermore, he boosted his price target from $116 to $146. These reports seem to indicate that Disney’s stock value can be boosted from these moves despite recent challenges.
Possible Approaches to Disney’s Stock
With this sort of response from analysts, a number of investors might consider buying Disney stock in anticipation of a surge or hold on to their existing stocks. There are a number of possible steps one could take in light of this, regardless of whether these analyses are to be believed or not.
Disney typically features a stock that pays dividends. Such payments have halted for the first half of 2020, however.
Therefore, make sure you’re up-to-date on the full impact of COVID-19 on Disney stock. Researching stocks is a complicated process, especially in our current world.
The act of trading stocks has become drastically simplified, however. There are a number of top stock trading apps that facilitate trading directly from a smartphone.
Do you think this new move will help Disney’s stocks? Will you be making use of their streaming service? Let us know your thoughts below.
Disclosure: Tim Fries has no positions in any of the stocks mentioned, and has no plans to initiate any positions within the 72 hours following the publishing of this article. This article expresses the opinions of Tim Fries. Tokenist Media LLC has no position in any of the stocks mentioned, and does not plan to initiate any positions within 72 hours of the publishing of this article. Please consult our website policy for more information.