Disney

Just wondering if anyone is looking? Great brand obviously and suffered terribly during Covid but at a reasonable price it’s a buy and business / earnings will return to normal eventually. But at what price to buy?

If we take the average of 2017,18,19 eps pre pandemic we get $6.9 per share so a 13 X PE on the current share price. 20 x PE would be c140.

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I’ve been looking. The last time the price was this low pre-pandemic was 2016. For me, the concern is the same as NFLX, PARA and WBD: what’s going to happen to revenues as viewership shifts from cable bundling to streaming services. This is particularly important for ESPN. The other concern is a recession and how that might impact both streaming and the parks. Bottom line, I’m tempted to start a position, but I don’t think Disney is anywhere near a bottom yet.

PP

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It used to be Disney has Mickey Mouse that doesn’t take a salary and kids love him. It’s a cash machine with no capx required except paying for people to come up with stories.

Now they spend all these money on parks(which are so crowded and the line are so long and cost so much my wife and I absolutely hate to go), on movies and trying to make stream profitable, with all these other rich competitors like Amazon and Apple coming after the same market.

Their PE is still trading like a growth stock but for them to grow they need to keep making these investments…

And I am not sure kids will be crazy about Disney and Marvel heros forever. Many more choices now. Papa pig, Daniel tiger, to name a few…

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so crowded and the line are so long and cost so much my wife and I absolutely hate to go

The partisan politics is now pervasive, infiltered every sphere of life. Now Disney is a political fight, I no longer like Micky Mouse, because of my politic.

BTW, I am not saying sleepy’s reasoning is due to his politics, but now politics is part of the investment thesis.

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Now they spend all these money on parks

Yes, ever since before they opened the first park in 1955. How sustainable has that been?

Mike

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Well the average analyst estimate for 2023 is $5.37, so c16 x 2023 estimated earnings. Fairly valued in my book. Agree it’s not a bargain yet.

And I am not sure kids will be crazy about Disney and Marvel heros forever.

“Kids” is a good point. I still love to read since many decades a few pages of age-old Donald Duck/Micky Mouse booklets during my morning toilet. Those attracted young and old likewise.

Gone today, as I had to find recently: As a big fan of the Marvel movies I’ve just seen my last one, thanks to them very abruptly addressing not me anymore but a completely different audience only. Everything that came after the fantastic “Infinity War” addresses kids only: “Spiderman - no way home” even consists of nearly exclusively kids as actors. I did hope for the 2nd “Dr. Strange” installment and was frustrated. Now “Thor - Love and Thunder”. Sooo ridiculous for anybody older than 12.

What a change of policy, of target audience. From mature actors (Mickey Rourke and his psychological inner hell), dramatic clashes between contrary mentalities (Iron Man vs. Cap), dark figures (Thanos) to popcorn kids-only stories and actors. I am out.

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I posted this on the Falling Knives board - I expect they can get to $80B in revenue with a 15% operating margin - which would roughly translate into $7.00 of EPS - and I think there is lots of potential for upside above this forecast (in the next 3-5 years).

tecmo

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And I am not sure kids will be crazy about Disney and Marvel heros forever.

Disney has a proven ability to adapt to market - which is not easy! I am bullish on Disney+ and their ability to become “must buy” streaming. Their other business areas are also incredible (ESPN, Parks, Merch, etc…)

tecmo

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…and their ability to become “must buy” streaming.

Recently got Disney+, Hulu, and several others from Verizon for free when I changed my subscription and paid less than before. After looking at your “must buy” streaming, I am very happy not to have paid for it and never click on it.

Honestly, I never liked the Disney park as a kid either. Much preferred other amusement parks.

IP

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I think the “Disney spike” in valuation was due to the growth potential of streaming and the like. Back to reality and valuation based on actual earnings rather than potential I’ll start to become interested around $70 per share.

Honestly, I never liked the Disney park as a kid either. Much preferred other amusement parks.

Yeah…no one goes there anymore; it’s too crowded

Mike

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https://wdwnt.com/2022/06/woman-arrested-for-slapping-her-hu…

Sorry, this link is better:
https://www.pennlive.com/life/2022/06/woman-slaps-husband-ov…

This almost happened me to last time my wife and I were in Disney!

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This almost happened me to last time my wife and I were in Disney!

Wow. Things have changed at Disney if that’s happening. I never found it stressful…just boring. More interested in cool rollercoasters than teacups.

IP

It’s not cedar point, thankfully. Disney World offers a rich array of experiences from mild roller coasters and 3D thrill rides to tacky bird shows and fantastic dining. I hated the pandora ride because I get nauseous, but the ratatouille ride was delightful.

No resort does all encompassing service better than Disney, but an enjoyable vacation does take planning, flexibility, and the understanding that this is really a trip, not a vacation.

PP

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Well, I like ol’ Warren’s quote (paraphrased) that taking your child to Disneyland is a magical experience that’s not easy to replace.

Pardon me, while I chitter on a bit on my armchair view of the world.

I’ve been a bit of a nut over the years – Disney parks, cruises, movies, hotels, etc…

My views on the experience have changed quite radically. I used to be amazed at the level of cleanliness, quality and service that existed across the experiences. Every single time I’d do anything Disney, my kids would have the time of their lives and it would feel special. It also came with Four Seasons prices, which was quite a surprise.

I know that (for example) the Disney Hotel on Oahu charges roughly the same rate as the Four Seasons next door, despite offering a much lower luxury experience.

Anyway, fast forward to today. The employees at the parks are definitely less enthused. You see a lot more “walking and talking” happening among them. The old guard 20+ year veteran employees are fewer and further between.

The parks feel crowded. Great for $$, lousy for the overall experience. The content feels too tailored to a political angle, as evidenced by the underperformance of Lightyear, Ms Marvel and Turning Red. This clearly has impacted the perceived value of the Company.

Now, perhaps, ol’ Warren’s adage that a business must survive management-by-monkey is relevant here and the quality of the brand and Walt Disney’s legacy will survive, but we’re definitely hitting a tough moment.

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