Disney shares rose 14% on Friday to a record high, as Wall Street cheered for a host of announcements around Disney +.
Investors have been tightening their grip on Disney’s direct consumer service since the Covid-19 pandemic forced millions of people to enjoy their home entertainment. With its parks and theater businesses damaged, Disney is able to reap the rewards of a new streaming platform that continues to bring in millions of subscribers.
Disney’s Investor Day
To satisfy consumer demand as broadcast wars intensify, Disney has been investing in specialized and exclusive content.
The stock closed at $ 175.72 on Friday after its best session since March. It has now increased by 21% year-over-year, topping the S&P 500, which is up 13%.
Disney on Thursday during Investor Day is set to release more than 100 movies and shows in the coming years, with 80% of those going directly to Disney +. The company will also allow users to opt in to mature content, allowing older audiences to view topics such as “Atlanta” and “Modern Family.”
“While we were expecting to hear of Disney’s rapid investment in their DTC businesses, the magnitude and quality of the tsunami content targeted at Disney + was mind-boggling and intimidating to any small company considering competing in a written entertainment venue,” MoffettNathanson analysts wrote in a post-event. They recommend holding the stock but increase their target by $ 21 to $ 160.
Several other analysts have also raised their stock prices.
Disney said it now expects to see between 230 million and 260 million subscribers on Disney + by 2024. In addition, it plans to increase service costs by $ 1 to $ 7.99 per month.
“What Disney did [on Thursday] was to show that they understand their content, their viewers, and that they can be well-nurtured where and when,” said Shawn Robbins, chief analyst at Boxoffice.com. “Broadcasting development is obviously a key factor in trying to keep their momentum growing, but re-making some of their major films in a mature and profitable theater emphasizes the importance of avenue for the long-term sustainability of their business and film industry. ”
While broadcasting is a clear focus of Disney, it is still dedicated to movie theaters. While AT&T’s Warner Bros. sending the full amount of the 2021 film to HBO Max on the same day taking those titles out of the theaters, Disney takes a different approach.
The company maintains its highly anticipated theatrical titles while remaining flexible in its release of projects that are budget-friendly or better suited for a particular type of release.
For example, “Raya and the Last Dragon,” which will be released in March, will come with a paid video of Disney + and theaters simultaneously.
However, that strategy could change. Authorities reiterated on Thursday that titles such as “Black Widow” and “Jungle Cruise” would go to the stadiums as planned. Chief executive Bob Chapek admitted at the launch that the company received an estimated $ 13 million from the box office in 2019, saying the success was “not a matter of sneezing.” In fact, Disney had seven films worth more than $ 1 billion that year.
Disney investors can also begin to look to the future when consumers can return to the parks, which will eventually return to full functionality. The company also has a slide show for films where movie theaters can be reopened with packed houses.
Disney executives say the company is expected to achieve the highest losses in the 2021 financial year and will make a profit in the 2024 financial year.
Disney shares jumped 14% on Friday to $ 175.72, while Wall Street met a pile of announcements around Disney +.
Investors have been tightening their grip on Disney’s direct customer service since the Covid-19 epidemic forced millions of people to stay home and have fun.
The company’s stock is on record, up 21% per annum.