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Category: Stock Market and Walt Disney
Date: 2 September 2019 Stock Price: $137.26 We take a look at an article published on Motley Fool which suggests that the Disney+ subscriber numbers could be way more than Disney's own estimates
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About The Walt Disney Company
The Walt Disney Company, together with its subsidiaries and affiliates, is a leading diversified international family entertainment and media enterprise with the following business segments: Media Networks; Parks, Experiences and Products; Studio Entertainment; and Direct-to-Consumer and International.
Media Networks is the primary unit of The Walt Disney Company that contains the company’s vast array of television networks, cable channels, associated production and distribution companies, and owned and operated television stations across two divisions – Walt Disney Television and ESPN.
Parks, Experiences and Products is the global hub that brings Disney’s stories, characters, and franchises to life through theme parks and resorts, cruise and vacation experiences, and consumer products—everything from toys to apparel, and books to video games.
For over 90 years, The Walt Disney Studios has been the foundation on which The Walt Disney Company was built. Today, the Studio brings quality movies, music and stage plays to consumers throughout the world. (Studios include Pixar- known for their animation movies) and Marvel Studios, 20th Century Fox and LucasFilms (Star wars movies)
Media Networks is the primary unit of The Walt Disney Company that contains the company’s vast array of television networks, cable channels, associated production and distribution companies, and owned and operated television stations across two divisions – Walt Disney Television and ESPN.
Parks, Experiences and Products is the global hub that brings Disney’s stories, characters, and franchises to life through theme parks and resorts, cruise and vacation experiences, and consumer products—everything from toys to apparel, and books to video games.
For over 90 years, The Walt Disney Studios has been the foundation on which The Walt Disney Company was built. Today, the Studio brings quality movies, music and stage plays to consumers throughout the world. (Studios include Pixar- known for their animation movies) and Marvel Studios, 20th Century Fox and LucasFilms (Star wars movies)
Extract from the Motley Fool article
The happiest streaming service on Earth?
UBS Evidence Lab -- the branch of the investment bank that tracks consumer behavior -- recently conducted a study to measure demand for Disney's soon-to-launch streaming service. In a survey of 1,000 U.S. residents conducted in mid-August, 43% of those surveyed said they are "extremely likely" or "somewhat likely" to subscribe to Disney+, which is well ahead of the company's internal forecasts. With an estimated 128 million households in the country, that works out to more than 54 million subscribers -- more than double the 25 million at the midpoint of Disney's forecast.
To put that into perspective, streaming leader Netflix (NASDAQ:NFLX) -- a top stock in recent years -- has about 60 million U.S. subscribers. If the results of this survey are accurate, Disney could be one of the top streaming services within just a few years of its launch.
That's not all. Of the consumers who plan to subscribe to Disney+, about 57% say they will cancel at least one other subscription service when they sign up. Among the hardest hit would be pay-TV bundles, with 37% of intended subscribers saying they would cancel an existing subscription. 33% said they would forego a video-on-demand (VOD) service, and 19% said they would abandon a premium broadcast network like HBO or Showtime. Some other findings of the survey will help provide context. Currently, about 79% of all respondents say they have heard about Disney+, while a clear majority of those surveyed (67%) said they would "likely" add Disney+ without eliminating any other services.
The marketing blitz has yet to come
UBS pointed out that the survey was conducted prior to the D23 expo -- Disney's fan convention -- which was held in Anaheim, California earlier this month. This is important, because the company used the event to kick off its pre-launch advertising campaign in advance of the Disney+ debut in November, and "marketing for the service has yet to hit critical mass," according to the report. The company sought to rally its fans by setting up kiosks that encouraged participants to sign up early for the service. Attendees at the D23 event were offered steep discounts in exchange for multiyear commitments to Disney+. That strategy appeared to bear fruit, as numerous reports indicate.
Disney expects to attract between 40 million and 60 million customers from international locales, for a total of 60 million to 90 million subscribers worldwide over the coming five years.
Read the full Motley Fool article here
UBS Evidence Lab -- the branch of the investment bank that tracks consumer behavior -- recently conducted a study to measure demand for Disney's soon-to-launch streaming service. In a survey of 1,000 U.S. residents conducted in mid-August, 43% of those surveyed said they are "extremely likely" or "somewhat likely" to subscribe to Disney+, which is well ahead of the company's internal forecasts. With an estimated 128 million households in the country, that works out to more than 54 million subscribers -- more than double the 25 million at the midpoint of Disney's forecast.
To put that into perspective, streaming leader Netflix (NASDAQ:NFLX) -- a top stock in recent years -- has about 60 million U.S. subscribers. If the results of this survey are accurate, Disney could be one of the top streaming services within just a few years of its launch.
That's not all. Of the consumers who plan to subscribe to Disney+, about 57% say they will cancel at least one other subscription service when they sign up. Among the hardest hit would be pay-TV bundles, with 37% of intended subscribers saying they would cancel an existing subscription. 33% said they would forego a video-on-demand (VOD) service, and 19% said they would abandon a premium broadcast network like HBO or Showtime. Some other findings of the survey will help provide context. Currently, about 79% of all respondents say they have heard about Disney+, while a clear majority of those surveyed (67%) said they would "likely" add Disney+ without eliminating any other services.
The marketing blitz has yet to come
UBS pointed out that the survey was conducted prior to the D23 expo -- Disney's fan convention -- which was held in Anaheim, California earlier this month. This is important, because the company used the event to kick off its pre-launch advertising campaign in advance of the Disney+ debut in November, and "marketing for the service has yet to hit critical mass," according to the report. The company sought to rally its fans by setting up kiosks that encouraged participants to sign up early for the service. Attendees at the D23 event were offered steep discounts in exchange for multiyear commitments to Disney+. That strategy appeared to bear fruit, as numerous reports indicate.
Disney expects to attract between 40 million and 60 million customers from international locales, for a total of 60 million to 90 million subscribers worldwide over the coming five years.
Read the full Motley Fool article here
The Walt Disney Company (NYSE: DIS) stock price history
The image below shows The Walt Disney Company's share price for the last 5 years. And it has performed pretty well considering 5 years ago its stock was trading at around $90 a share, and currently its trading hands at $137.26 a share. The performance of the Marvel Studio over the last couple of years providing some spark for its share price, while ESPN seems to have been a drag on the group.
The Walt Disney Company (NYSE: DIS) stock valuation as at 26 August 2019
Based on the group's latest financial result, the market they operate in and the competition they face in the entertainment sector in general against other content providers such as Netflix we value the group's stock at $125.20 a share so we expect the group's shares to pull back towards levels closer to our target price of $125.20. We therefore recommend long term investors to wait it out and look the buy The Walt Disney Company shares at levels closer to 10% below our target price, so look to buy at levels closer to the $110 a share.
But should their Disney+ subscribers turnout to be a lot more than Disney anticipates then our valuation above might have to adjusted upwards considerably.
But should their Disney+ subscribers turnout to be a lot more than Disney anticipates then our valuation above might have to adjusted upwards considerably.