Is Disney Stock a Buy?

The Walt Disney Company is one of the most recognisable brands on the planet. Its enormous popularity, global reach and ability to constantly evolve has brought Disney considerable success in the stock market over the years.

But what about the future? Is Disney stock a buy in 2024? In this article, we will take a look at how Disney shares have performed in recent years, consider whether investors should invest in Disney and demonstrate how to buy Disney shares!

Disney Share Price History

Before we examine the question “is Disney stock a buy”, let’s take a look at how Disney has performed in the stock market in recent history.

Unsurprisingly, Disney stock plummeted at the outbreak of the coronavirus pandemic, as tourism dried up and the Magic Kingdom was forced to close its doors to visitors.

However, share price soon began to soar thanks to the unexpected speed at which streaming service, Disney+, attracted subscribers. As investors drove up the Disney share price, it hit an all-time high in March 2021. But shortly after investor interest began to cool.

Real-time earnings weren’t supporting the lofty stock market valuation and, as the global economic outlook worsened, investors became increasingly focussed on present profitability rather than potential profitability in the future.

Consequently, share price fell and has yet to recover to anywhere near its all-time high, sitting around 55% below its peak at the time of writing. Does this represent a buying opportunity for Disney? Is Disney stock a buy?

Disney Earnings

A company doesn’t survive for more than 100 years unless it’s doing something right. But, remember, if you decide to buy shares in Disney you are buying a portion of the company. The future success of your investment, therefore, will depend on the future success of the company.

So, before making any decision, it’s important to do your research and, in particular, analyse how Disney has performed recently. In the table below, we have highlighted a few of the key indicators from Disney’s fiscal year 2023.

Source: Disney – Fiscal Year 2023 Annual Report.

Is Disney Stock a Buy?

In order to examine whether Disney is a buy or sell, we will take a look at both the bull and bear cases for investment.

Bull Case

First, the bull case.

Disney’s streaming service, Disney+, has been a cause of discomfort for shareholders for some time. Despite quickly racking up large subscription numbers, Disney+ was making eye watering losses. These losses have played no small part in Disney’s share price decline over the last few years.

However, this long-time headache may be starting fade. In the quarter ended 29 June 2024, Disney’s Direct-to-Consumer (DTC) streaming business, which houses Disney+, turned operationally profitable for the first time since Disney+ was launched.

In terms of Disney’s total operating income for the period, which was $4.2 billion, the $47 million achieved in streaming is just a drop in the ocean. Furthermore, based on total streaming revenue of $6.4 billion it represents an operating margin of less than 1% for the streaming business. However, shareholders will be hoping that a corner has been turned here and that Disney can build on this going forward.

The chart below highlights the DTC segment’s road to profitability each quarter since the launch of Disney+ in November 2019.

Of course, streaming is just one part of Disney’s empire. Besides Entertainment, which houses the DTC business amongst others, Disney also operates its Experiences segment, which consists of its theme parks, hotels, cruise lines and consumer products.

Whilst its streaming services have racked up big losses, since reopening post-pandemic, the Experiences division has remained a profit engine for the company. In the company’s fiscal year 2023, the Experiences segment recorded operating income of almost $9 billion, 70% of total operating income.

Yes, rising costs and weakening consumer demand has seen this segment come under pressure recently, but it remains a key source of profit for the entertainment giant and one which should benefit from lower inflation and potential interest rate cuts.

Bear Case

So what about the bear case for buying Disney shares? Well, although the recent results in streaming were widely welcomed, potential investors might want to remain cautious about drawing too many conclusions.

It will take more than one profitable quarter for the streaming business to be considered a success. It’s certainly a step in the right direction, but now Disney need to build on this going forward. This will inevitably involve successfully cutting costs in the business to improve its currently low operating margin.  

One should also consider Disney’s domestic market, which generates the lion’s share of revenue for Disney’s parks and experiences.

Despite inflation falling, consumer sentiment in the US remains fairly weak historically and, consequently, there are concerns about a slowdown in the world’s largest economy. Any downturn in the US economy is likely to negatively impact Disney’s business.

Disney Share Price Forecast

So, what do the analysts currently think about buying Disney shares? Out of 23 analysts asked for a Disney share price forecast, 19 gave the stock a Buy rating, 4 rated it Hold and 0 said it was a Sell.

Amongst these stock forecasts, the highest 12-month target was $145 and the lowest was $94. The average Disney share price forecast at the time of writing was $118.53.

How to Buy Disney Shares

With Admiral Markets, you can invest in Disney as well as thousands of other stocks from around the world. In order to learn how to buy Disney shares, follow these simple steps:

• Open an Invest.MT5 account and log in to the Dashboard
• Open the web trading platform
• Search for the Disney stock symbol and open the price chart 
• Create a new order, enter the number of Disney shares and click ‘Buy’ to send your order to the market!

Investing with Admiral Markets

With an Invest.MT5 account from Admiral Markets, you can buy shares in more than 4,500 companies and over 200 Exchange-Traded Funds (ETFs) around the world. Some of the benefits of investing with Admiral Markets include:

• A low minimum deposit of €1
• An extensive range of educational materials and regular market analysis at no extra cost
• The ability to buy fractional shares in 700 of the world’s leading companies, including Disney

Click the banner below to find out more about investing with Admiral Markets:

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