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Market Insights

Disney down but not out: heading for a happy ending?

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Disney’s been on a real rollercoaster ride since Covid changed the world.

Last week’s earnings report was not well received by the market. New Disney+ subscribers have been harder to come by.

Disney ‘only’ added 2.1 million subscribers in the last quarter, bringing the total to 118.1 million global subscribers.

Analysts were forecasting 119.6 million, the average of estimates compiled by Bloomberg.

One quarter does not a company make!

Even as the pandemic forced their theme parks and hotels to close, Disney revenues were dented but there was no sting in the tail…

On the contrary, the launch of the Disney+ streaming service in November 2019 was incredibly well-timed.

No better time to grow than when you’ve got a (literal) captive audience!

There’s no denying that Disney+ has been a HUGE success so far, gaining ~118 million subscribers in just two years!

Yet the market seems to want more.

The reaction was brutal.

Having tested the 200 day moving average from below, Disney gapped down right through support and hasn’t recovered in the days since.

Disney down but not out: Heading for a happy ending?

Now closing in on the pre-Covid high of 153.24, this is definitely one to watch.

See, although this report didn’t meet expectations Disney is an absolute giant in the media world.

From the well-known and eternally popular children’s characters to Marvel, Star Wars and ESPN, there’s no doubt that Disney has an absolute wealth of content for all ages and tastes.

The plans for building out that content pipeline to ensure constant subscriber growth will be closely scrutinised, especially as releases have been consistently delayed due to production disruptions.

Why does this matter?

-Launching popular shows is a solid strategy to deploy and grow subscriber bases.

-The popularity of Squid Game helped Netflix add 4.38 million subscribers in Q3 alone, compared to 5.5 million in the first half of this year.

-Disney has some real blockbusters in the works and they announced a new collaboration with IMAX & DTS for Disney+ Day on Friday 12th of November.

In a press release, Rich Gelfond, CEO of IMAX said:

"For more than a decade, IMAX has helped filmmakers take fans across the Marvel Cinematic Universe in theaters and now that epic journey crosses into a new world: the home,"

"IMAX, Disney, and Marvel Studios are giving the fans what they want: the most immersive viewing experience throughout the life of a Marvel Studios film, from exclusive theatrical release to the library at-home where they can now watch the Avengers assemble with more picture than ever before."

They’ve just launched in South Korea & Taiwan, and Disney+ is expected to launch in Eastern/Central Europe in Summer 2022.

Disney management reiterated their goal of achieving 260 million global subscribers by 2024.

Considering what’s been achieved in just two years, that’s not so outlandish.

As the world strives to move on from the pandemic and leave travel restrictions behind, 2022 could easily be a year of ‘pent up demand’ for Disney parks too.

If the Disney stock were a story arc, this is the part where the hero faces life-defining challenges and adversity.

Will the Disney story have a happy ending?

Not investment advice. Past performance does not guarantee or predict future performance.

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