Are you invested in Disney?

Peltz is shaking up the mouse’s house.

Dealbook has a longer write up of the events since July. I wont copy them here…it is not fair usage. Peltz has a history of successfully shaking up major corporations for profits. The stock is at an 8 year low.

In March do you back up the truck?

I did not see the earlier post on this.

It’s basically where it was 5 years ago. My sis has this as a long term buy and hold and I really think when she gets out of it the stock will literally just be 10 points higher. What a terrible way to invest your money. I think Disney’s allure is over. So expensive - the magic is not there any more. It’s an allusion. Never buying into Disney. It’s over.

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Disney is an entertainment company. Entertainment is optional. Therefore, entertainment is cyclical. It goes up, it comes down, generally in sync with the general economy. They went down with the Covid shutdowns. People couldn’t go to the parks or movie theaters. So two major sources of income got hit. Things got better as the parks re-opened and people starting going to the movies again. They also got slightly lucky with their timing of Disney+ coming out just before the pandemic hit. That was one revenue source that didn’t get interrupted, and probably increased faster than expectations.

Right now, Disney has about 164 million Disney+ subscribers. Guessing that they average about $8 a month for the subscription, that gives them $15 billion in revenue from there. Looking at a bit of history, pre-pandemic and pre-D+, they did about $70 billion. Adding those two, gives a run rate of $85 billion today as a benchmark. As of the most recent reported result (9/30/22), their trailing 12 months is at about $82 billion. The 12/31/22 numbers should be out very soon, and they almost certainly will be pushing 90 billion in TTM revenue.

So the company is doing OK for now. They definitely lost some business during 2020 and 2021. 2022 showed really good recovery from the pandemic. And they’ve ousted their underperforming CEO, bringing his predecessor back. That should improve things further.

On the down side, we do have a potential recession looming in 2023. If that comes about, it will almost certainly cut into revenue from Parks. Cheaper and/or shorter vacations will be in order. Movies could be hurt, as folks put off seeing new films until they are at cheaper venues or come out on D+. But D+ is likely to be pretty sticky, if not growing. If you can’t afford to see the latest movie, subscribe to D+ instead and let the whole family see a bunch of movies for less than the price of a single theater ticket.

Then there’s the upper income strata. Folks there are basically unaffected by recession. Yes, they make less, but still way more than they need. They will continue to visit parks and movie theaters, and might even take the grandkids along more often if the parents cut back.

Disney certainly isn’t over. They may have a slightly rough patch ahead, facing both recession and rebuilding from a failed CEO. Longer term, I think they are going to be fine. If you’re investing for the next 6 months, Disney might not be a great choice. If you’re investing for the next decade or two, this is likely a time for bargain hunting.



This may well be an opportunity coming up for a low entry into Disney.

I bought some Disney a few times over the last few weeks as it neared its 52-week and 5-year lows. This is the first time over a 40+ year investing life that I’ve owned any Disney.

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It’s not like its been a terrible stock over time. You could have bought at about $50 ten years ago, and it’s about $100 today. And in the mean time you would have gotten $10 in dividends. That’s somewhere in the neighborhood of an 8% return.

Not a high flyer, for sure. But reasonably steady performance. Particularly if you ignore the strange price movement during the pandemic. Why would a company that lost a sizeable chunk of its revenue for several months see it’s stock price double? Clearly stock traders were smoking something pretty good there for a few months.



The suit filed Tuesday in Los Angeles Superior Court alleges that Disney and its studio 20th Century Fox committed a number of transgressions, including withholding profits and cutting deals to boost its streaming platforms and stock price. This act deprived TSG of cash to invest in individual films and its efforts to sell its stakes in other movies, the lawsuit says…

TSG co-finances the production and marketing costs of films in exchanges for a share of the defined gross receipts after the film’s release. The group has helped co-finance around 140 films produced by 20th Century Fox, which Disney acquired in 2019, including “Avatar: The Way of Water.” In total, the company said it has invested around $3.3 billion in the studio’s content since 2012.


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