The Walt Disney Company had a lot of reasons to celebrate today as the company’s stock price jumped more than 4% and closed at $184.38 a share, the highest the stock has been since early May. The stock opened this morning at $177.71 a share and grew steadily throughout the day, nearly hitting $185 a share, before settling back to $184.38 by close of trading day. The stock is up .28% in after hours trading.
Disney’s stock price has been frustratingly stagnant for much of the last few months. The stock price surged at the end of 2020 with positive news surrounding vaccinations and a long list of new projects announced by Disney for their streaming service Disney+. The price peaked in early March, 2021, when it broke $200 a share for the first time in the company’s history.
Upon reports of a slowdown in Disney+ subscribers in spring of 2021, the stock retreated a bit, dipping below $170 in mid-May. Many analysts and financial pundits were touting the stock as a growth stock, but it seemed like it was stuck in neutral through May, June, and into July. With some in the media putting the stock into the hold category as many wondered why the price was remaining flat. It was especially confusing since their theme parks were fully opening and their cruise line was taking reservations for later in 2021.
It seems investors were waiting to see some data from Disney’s streaming service, because they got some great news over the weekend and the stock responded immediately. Disney’s release of Black Widow was a huge success over the July 9th weekend, with a ‘great for covid, average for normal times’ $80 million in domestic ticket sales, along with a $60+ million coming in from Disney+ Premier Access of the film. Adding the domestic box office, the Premier Access total, and the worldwide box office, the film has brought in $215 million in just its first weekend. A huge total and a huge win for both the box office and the Disney+ Premier Access model.
Many Investors were waiting to see if Disney could make this model work and it is clear that they can and they did. It will be interesting to see if Disney takes the momentum from this weekend’s great news and rethinks some of their future releases. Right now, the only other movie to get a same day and date release in theaters and Disney+ Premier Access is Jungle Cruise.
Disney is going to have to continue to prove to investors that their streaming service has what it takes to maintain the lofty expectations set following its jaw dropping first year. While the theme parks, resorts, and cruise line continue to open, it appears that the company’s stock price is tied closer to its streaming success over anything else. Let’s see what else Disney has up its sleeve to continue to grow its subscriber base.
However, to be clear, while the stock price might be sensitive to the daily stories regarding Disney’s Direct-to-Consumer division (streaming), the foundation of the company’s stock price is based largely on the success of their theme parks. The recent reports from investment firms that find a pent up demand from consumers for Disney’s theme parks are the bedrock upon which the stock price is settled. Consumer demand, combined with other indicators, such as sold-out special ticketed events like Walt Disney World’s Halloween events and the positive feedback regarding Disney California Adventure’s ‘Avengers Campus’ in Disneyland, all add up to establish a strong baseline for The Walt Disney Company’s stock, which allows the growth potential from their streaming services to dictate the day to day changes in valuation.
(Nothing in this article should be construed as financial advice. As always, one should seek advice from a licensed professional before making any investment related decisions. The information provided in the article comes from publicly available information and the opinion belonging solely to the author.)