Source: PaxForex Premium Analytics Portal, Fundamental Insight
Following Disney and its ventures over the past several years has been as fascinating as paying money to see one of its movies. Highlights include new CEOs, old CEOs, the complete cessation of certain activities, the rapid growth of streaming, enormous losses, and outstanding upswings.
Not surprisingly, you'll hear different thoughts about the company's outlook and if you should buy its stock. There's just so much to set the record straight when it comes to the world's largest (and arguably most complex) entertainment company.
CEO Bob Iger's incredible return to the top job was a signal of confidence on Wall Street as he laid out an agenda for Disney's well-oiled machine. The picture looks very different today, but some things never change, such as James Cameron's amazing talent to film fantastic, sales-generating movies, and Disney's super skill to find people like him and produce new hits from solid franchises.
Hence why Disney stands a good chance of an outstanding performance this year.
In 2009, Iger led the deal to acquire Marvel Studios for $4 billion. After that, Marvel has become an incredible asset for Disney. It has accounted for six of the 20 highest-grossing movies in history and accounted for 21% of all domestic ticket sales in 2020 and 2021. The Marvel Cinematic Universe (MCU) has grossed more than twice as much revenue as the next largest franchise, Star Wars, also owned by Disney.
The House of Mickey has completely embraced this wave and is creating content for big and small screens to keep Marvel fans happy and engaged. It has also perfectly tailored all the content to work together, so viewers will need to follow the stories on the streaming service to understand all the events told in the films that are released in theaters.
In June, then-CEO Bob Chapek explained, "We see each new Disney+ Marvel original series attracting more viewers and new subscribers who have not previously used Marvel content on the service. These fans then continue to further explore the MCU through theaters and content-based products.
Marvel's first release of 2023, "Ant-Man and the Wasp: Quantumania," exceeded expectations and became the third-highest February premiere in history. Marvel has two more films to screen in theaters in 2023 and seven more films slated for release through 2026. This is in addition to streaming content and other products.
Disney is so much more than Marvel. The best film of 2022, Avatar: The Way of the Water, was released by Disney 20th Century Studios, which the company acquired in 2019, also under Eiger's excellent direction.
Let's take a look at Disney's 2022 film program in comparison to its competitors. Here it compares to any other studio that has a top-10 movie in 2022, including Paramount, Universal, and Warner Bros. Discovery.
And no, 2022 was not exceptional. Okay, "Avatar: The Way of the Water" was outstanding, becoming the third highest-grossing film in weeks. But Disney usually outperforms other media companies in ticket sales in any given year.
The first note Iger sent out after his brilliant return as CEO was about giving Disney creatives more control over the distribution process. More freedom in the process should result in content being delivered in the right environment to make the most money. Ticket sales are central to recouping the cost of expensive content and sending the right movies to theaters to increase profitability without reducing streaming efforts.
Disney will release seven more non-MCU films in 2023. Three are sequels to franchises Indiana Jones, Guardians of the Galaxy, and Wish II, and two are based on previous hits: Peter Pan and Wendy, The Little Mermaid. Iger also told investors that new sequels for Frozen, Toy Story, and Zootopia are in development.
In other words, much of Disney's theatrical content is almost a win-win. The creators know that audiences love and expect this content. So far, the movie theater industry has not met an untimely extinction as many expected. It is still recovering, but hit movies are attracting audiences.
As with the MCU, Disney is using these movies to create other products and experiences that boost sales, such as toys, video games, books, and theme park rides.
However, Disney is under increasing pressure from its streaming business. The company actually lost subscribers in Q4, and the losses are still staggering. Nevertheless, investors were happy with the progress in cutting costs and reducing losses from streaming, although they were still coming in. Disney has doubled down on its commitment to making Disney+ profitable by the end of 2024.
Investor confidence is growing as Disney returns to its decades-tested formula of using the best franchises to grow its business. It's refining that formula for the streaming era, and the 10 movies coming out this year could make 2023 the year of the blockbusters for Disney.
As long as the price is above 97.00, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 100.19
- Take Profit 1: 107.00
- Take Profit 2: 113.00
Alternative scenario:
If the level of 97.00 is broken-down, follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 97.00
- Take Profit 1: 94.00
- Take Profit 2: 90.00
