Disney: the Belle of the ball
The Dow Jones index results in 2022 are far from a fairy tale, though we are unlikely to surprise all of you with this fact. Other leading US indices have not been living the dream either. The same can be said about the world’s economy. Disney’s papers have lost about 40% in the last year, so it’s about time to add them to the portfolio. Wait… what?
First, let’s take a look at the Dow Jones Industrial Index chart. This index tracks what’s going on with 30 prominent companies, including Disney, listed on stock exchanges in the United States.
The Dow Jones has lost 10% over the last 12 months, and it’s actually ahead of other popular American indices. The S&P 500 has had a 19% drop, and the Nasdaq Composite has seen a loss of 34%.
This chart may not surprise you if you haven’t been living in a cave for the last couple of years. The string of events we have faced over the last years is beyond belief, absolutely surreal. If you had heard of them, let’s say five years ago, you would have never believed it would become reality. Who would have, though? What to start with – the pandemic, the military conflict between Russia and Ukraine, the energy crisis, supply disruptions, mounting prices, or maybe swift inflation? No wonder the stock markets are volatile and sense discomfort (to put it lightly) in this environment.
Disney’s stock performance somehow makes things look even worse – it’s seen a drop of almost 42%.
There are several reasons why things are going so poorly. First and foremost is the bear market, which Disney’s stock has not been able to outrun.
Second, the company wasn’t able to make the most of the pandemic online boom as many other entertainment giants because it has many offline money-making activities such as theme parks and cinemas where, naturally, the flow of visitors was cut down during Covid-19.
Third, all streaming companies are suffering a decline because investors are afraid that people will spend less money on entertainment during the macroeconomic crisis.
Nevertheless, the company performed well in Q3 of 2022. Theme parks’ visitors, sport streams viewers, and Disney+ subscribers gave revenue a lift.
Streaming is the keyword of the new Disney. Disney+, ESPN+, and Hulu are the three segments that are expected to bring in significant profit in the future.
One more important detail is the brand itself. Disney is an iconic brand that is loved by many generations.
Of course, there are downsides as well. One of them is the world crisis, which as we know, sounds really critical. Food and heating are more important than a Disney+ subscription or visiting a theme park. The second threat to success is vibrant competition amid streaming services — from Netflix to Apple.
Moreover, we need to remember that the general market remains unsteady. Most stocks may get dragged down with indices continuing their fall, but analysts still maintain their bullish view on Disney – the average forecast for the next year is +37%.
One more piece of hopeful news is that during a market downturn, stock prices are often much lower. Even the highest-priced stocks are being sold at steep discounts right now, with some of them down more than 50%, meaning many stocks are looking cheap.
