I have been following Disney stock for a while now and am debating whether to invest.
Do you think the price is attractive for you?
I do think the price is attractive, but only if they figure out what to do about their problems, of which there is no shortage.
Iger loaded them up with franchises to exploit, a genius move at the time, but several of the franchises are tired. It appears the superhero genre has run out (everything does; remember when Westerns were all you could find on TV?). Star Wars isn’t kicking it, there is competition a plenty in traditional animated films for kids, and the last entries for Pixar have not been rocketships. From a place of massive domination of the box office, Disney is struggling on multiple fronts to re-engage.
Speaking of box office, it’s not clear that it will ever see the golden heights again. Barbie & Oppenheimer saved 2023 (not for Disney, alas), and maybe some sort of miracle will appear again, but multiplexes are closing, not opening, auguring harder times for the paying film customer.
The streaming wars are still burning cash, so maybe Disney can win by not losing so much? But traditional cable is also disintegrating; cord cutting continues apace and that affects every cable programmer - not just in the monthly checks to the pocketbook from Comcast, et al, but in the value of the assets in the portfolio. What, for instance, is “Freeform” worth these days? Is any cable customer going to cancel if it drops off the lineup?
All of that said, the Parks (ships, experiences) are a bright spot, the overweening press reports about dropping attendance notwithstanding. Much of that, I suspect, was “weather”, it was damn hot last summer, yet income remained high even as crowds were at less that full capacity.
Likewise for ESPN, once a big loser, now a big winner, but it’s unclear how long that continues. Rights fees continue to escalate and sports is, like the rest of broadcast, splintering. Now you can find (some) sports on streaming, on cable, on broadcast, on subscription, and elsewhere. The days of one cable channel dominating are over. It remains to be seen if Iger can figure out what to do with this jewel.
I have confidence in Iger, but then it was some of his moves that presaged the current condition of the company. They were smart at the time, but the world changed around him. Never mind the political imbroglios, that will pass. The question for me is “Can he fix it?”
Honestly, I’m not sure. There is astonishing brand power (some of it weaponized against them by the Right Wing) and there is wonderful legacy and employee mission. I’d be inclined to vote with my dollars, but there are other places for those which might not be so complicated to figure out.
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I started buying some Disney for the first time in late 2022 thinking that pandemic recovery would be good for them. I bought some at $99, some at $91, and some at $85. I was intending on averaging in over time until I have a “full” position in it (“full” varies, but usually means that it would have at least some meaningful overall effect if I am correct and it produces a reasonable return). Since then I’ve paused my purchases because I can’t think of any real transformative event for them right now that could produce good returns. Instead, when the stock see a downdraft, I periodically sell puts at a price I would be willing to buy more shares. For example, in 2023 I sold puts with strike prices of 75 and 80 a few times. So far, all those puts have expired worthless, but eventually I might snag some additional stock at those lower prices. But meanwhile I simply consider the gains from those expired puts as part of the return on my investment (like dividends are) in Disney shares. In the end, while my net IRR on my Disney shares is now -1.7%, if you include the “income” from the puts, it is +0.7%, still dismal but at least positive.
That said, I have a comment about movies in general. My wife and I have been members of those movie clubs for 5 or 6 years, so we generally see “all” the movies. And one thing that I think may be rankling moviegoers is the preaching. Don’t get me wrong, I’m not one of those “go woke, go broke” people. The movie preaching, along with the turnoff, happens from both sides of the political spectrum, and even from the middle of the spectrum. When people go to the movies, they want to hear/see a story, they want their interest piqued, they want to be entertained, they rarely want to be preached to. I can think of two recent example from the last few weeks. We saw “Shift” and it was full of blatant preaching, Jesus-y style without mentioning the name, and that obscured what was a good idea for an interesting sci-fi/dystopia style film. And a few days ago I saw “Aquaman” (whatever the latest version is), and it was FULL of climate scare stuff, like literally in your face, explicitly stated. That’s a turnoff, and makes the movie much less enjoyable. I think these things show in the numbers, especially now with rampant social media, people share their thoughts about movies immediately and widely. Neither of these are Disney movies (I think) but I’m just using them as examples of the current trend in moviemaking.
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I would never invest or buy/purchase or spend a dime on this Woke company. Kick Rocks. Taking a stand against this woke agenda.
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I would never invest or buy/purchase or spend a dime on this Woke company. Kick Rocks. Taking a stand against this woke agenda.
Ah. So you’re going to take away from them what they already didn’t have. Stunning, in the logic.
I see by the flag at the top of the post that you’re new here. Some people try to fit in and get the tone of the place first, but not everybody does that, obviously.
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Do you have other companies you are considering investing in? Disney’s troubles are their own doing. the stock price has reflected the disenfranchisement former disney park attendees, movie goers or merchandise buyers. it’s a falling knife, so to speak ,and its upside is limited without drastic changes to upper mgt. imho, I’d stay far far away as long as kethleen kennedy is there.
I find this a curious comment. Lucas Film is a rather small part of Disney’s film operations. The others include: Walt Disney Pictures, Walt Disney Animation Studios, Pixar, Marvel Studios, 20th Century Studios and Searchlight Pictures. So maybe 1/7th of the Disney film product. But, as they say, the film division is small potatoes anyway, at least as far as profit goes. The big driver is “experiences”, aka parks, but also cruise ships, etc.
Maybe there’s more to your argument, but disliking the head of one smallish segment of a major corporation seems to put the focus, well outside the realm of what’s important.
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Doubt it. Short blanket statements about “woke” and another targeting a particular person who does not have all that much to do with the overall Disney brand indicate a depth that does not exist.
Pete
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