Billion Dollar Box Offices
Theme parks, movies, consumer products, and more… Disney does it all. This year, the company has blockbuster movies coming thick and fast, along with an influx of new investors looking to cash in. In short, Disney has investors dreaming.
When a brand is so special, the market will christen the stock a ‘franchise stock.’ That means even in economic downturns, it’s the brand of choice, keeping margins stable and delivering big profits by way of superior pricing power. Neither Paramount, Fox, Universal, or even Warner Bros. can boast that, leading Disney to trade at a premium on the stock market. It’s been a tricky spell for cinema stocks generally, but not for Disney, soaring 30% this year. The reasons why trace back to a) the announcement of Disney+, a streaming service that challenges Netflix, Hulu, and Amazon Prime, set to be packed with every film in the Mouse House, and b) this year’s movie mania!
Last month alone, the company made $4 billion worldwide on the back of “Avengers: Endgame” and “Captain Marvel.” Investors are now pricing in a bombshell rest of the year. “Toy Story 4”, “The Lion King,” “Frozen 2”, and a new Star Wars film are all in the pipeline, these further films expected to smash the box office records to the combined tune of 9 billion dollars by year end.
However, 2019 queues to get into the movies don’t stretch into 2020. An interesting divide has emerged between long term and short term investors. Those in it for the long-haul want to be very careful about how much they pay for shares, as Disney’s line up of films beyond 2020 isn’t nearly as blockbuster. Further, the answer to just how many families want sequels to these franchises is what drives today’s stock price, but these remain questions unanswerable until theatre doors swing open. Popcorn?
