-Written by Sijia-
Though $DIS is the worst performing stock in the Dow Jones this year and many investors are not convinced that it can return to its full strength, my view is it could get a boost in the second half 2022. First, we know that Disney owns well-known assets such as Disney theme parks, online streaming service (e.g., Hulu, Disney+, ESPN, Marvel, etc.), which can always protect their market share and help it win over competitors.
Here are the main reasons:
- Rebound travel intention after the pandemic. According to Disney’s Q2 financial report released on May 11, theme parks doubled its revenue from $3.2 billion to $6.6 billion In last quarter, which matches with the prediction of World Travel & Tourism Council (WTTC) that U.S. travel and tourism could strongly rebound this year. People are so eager to travel and go outside after the pandemic. This would be a great trend to $DIS investors. Not just that, one colleague of mine interviewed about 16 people and they have already gone to Disney World/Land twice this year and plan on visiting at least one more time this year so that’s huge sign. Yes, yes. I know it’s not a statistically valid sample size but directionally, it’s a good sign.
- Disney+ loyalty is more durable than its competitor. They’ve got fan base of people who are subscribing because they love the content, such as Star War, Marvel, and other Disney movies. People may come and leave Netflix for one show they like, but if you are big fan of Disney, your taste won’t change so much. Even though high inflation, recession and low earnings may result in decreasing theme park visiting, Disney’s streaming portfolio (including Disney+, Hulu, ESPN) already have over 200 million subscribers in total. And this number will still increase
- Disney bets big on ‘Avatar’ series. The movie Avatar 2: The Way of the Water will be coming out in theaters this December. Avatar set the record for the highest-grossing film at $2.8 billion when it hit cinemas back in 2009. James Cameron’s films present a huge opportunity for the entire Disney company that may be worth far more than $1 billion box office Avatar 2 will reach. Disney not only expects “Avatar 2” to bring in billions of dollars in box office revenue, but also plans to launch three more “Avatar” sequels by 2028, and their vision has even been placed in these 6 years. Also, they can generate revenue from building Pandora World theme park. With Cameron as the film director and his reputation, immersive special effects with more advanced technology, a release date during Christmas, and Disney’s Pandora World theme park, it all makes the Avatar series a good
Conclusion: It’s good time to buy $DIS now after the plunge in nearly a year. Also, $DIS is selling at its lowest price-to-sales ratio in the previous decade! In other words, Investors can pay a discount price for a premium business that has been underestimated. Both segments will perform well backed by rebound travel intention and customer loyalty to Disney streaming services. Not to mention the benefits Avatar series can generate.
Do your own DD before making any investment decisions.