The Walt Disney Company (NYSE: DIS)

Updated: Mar 17, 2021

Disney - More than your favorite childhood movies.


Disney poses an exciting investment in media and entertainment.


Why We Love Disney:

  • Disney Plus’s growth has been astounding and is expected to continue to grow at a breakneck speed.

  • Disney Plus has new hit TV shows launching like Wandavision and The Mandalorian.

  • Pent-up demand for travel and vacations should give the parks and cruise line segments of the business high revenues.

  • Disney has content dominance unlike any other company in the industry.

  • The company has a long successful history.


What We Don’t Like:

  • New strains of covid-19 or a slowdown in vaccine rollout may keep park revenue low through 2021.

  • Streaming is an incredibly competitive industry and Disney Plus may not keep up its breakneck growth.

  • Covid-19 may have permanently pushed demand away from movie theaters, requiring a rethink of how Disney traditionally launches and profits off its movies.


Think of your favorite movie, How about your favorite TV show? Chances are Disney (NYSE: DIS) made both. Over the past decade Disney has become a media and entertainment giant. The company owns Lucasfilm, Marvel, Hulu, ESPN, ABC News, Pixar and 20th Century Studios. The sheer amount of content Disney creates is staggering.


Disney’s stock had an astounding year in 2020. The share price started the year near record highs before plummeting over 40% with the onset of covid-19 as investors feared the worst. Since then the stock has had an astounding rally and reached all time highs this past December. What accounts for this rally? Disney has aggressively pushed its new streaming platform Disney Plus and it is paying off. The company originally hoped to have 90 million subscribers by 2024. One year into its existence, Disney plus already has 86.8 million subscribers and has upped its 2024 outlook to 230-260 million.


Disney also sustained a major revenue hit because covid-19 closed its parks and cruise industry. This led to a 10 billion dollar revenue drop. With widespread vaccinations now taking place, Disney’s revenue from its parks and cruises will likely come roaring back. In fact, we expect Disney will face higher demand for its parks than it did pre-pandemic as demand for vacations has been pent up and people now have extra savings from not going out to eat and other expenses.


Between Disney’s content dominance, its ability to now distribute this content with its ultra-popular Disney Plus, and the expectation for parks revenue to come roaring back, we at People's Capital believe Disney could be a strong investment and reach a share price of $280. It should be noted that this is a long term position, on a 3-5 year horizon. In the short term, depending on stimulus, the state of the pandemic, and general instability in the market, Disney could see declines before rising to our price target.


Best,

People’s Capital Team


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