Recently CNN interviewed a handful of people who owned Disney (DIS) stock, including a woman who inherited stock from her own mother who bought it for $3 a share. Today, the stock is worth $110 per share, so let’s just say her mother sure knew how to pick them! These families aren’t the only ones who are benefiting from Disney’s incredible portfolio. In fact, George Lucas just netted 2.2 billion dollars on paper due to the increase in Disney’s stock value over the last two years. If only we could all be so lucky, right?
Disney has received a lot of press recently because their shares have risen 33% in the past year alone. Yet, not everyone is buying. Some people are selling because it’s a bull market and they are concerned Disney is valued too high right now. Others are carefully looking at all aspects of Disney’s business including their cable networks, which contribute to one third of their revenue. Cable networks are a volatile business and with ever changing programming costs, new packages, and profit-focused partnerships, Disney has had a few issues in the last year or so. For example, they sued Verizon Fios (VZ) for breach of contract after Verizon started offering their “Skinny” cable services package. So far, Verizon says they did not break any contracts at all and says that Disney should be more amenable to giving consumers the options that they want.
This recent lawsuit press isn’t exactly good for Disney, yet Disney’s brand is so incredibly strong that they can weather many, many storms. With so many streams of income including parks, cruises, media, television, and hit movies, it’s no wonder that people are so attracted to Disney stock even if they get bad press from time to time. Investors probably know that one of the greatest benefits to owning Disney stock is that their business seems to be constantly booming. Their past statistics show that they can raise their prices regularly, and people will still continue to buy into their products. Not many companies can raise the prices of their tickets incrementally and still have record-breaking numbers of visitors year after year.
Disney’s talented staff also has the unique ability to create blockbuster hits. For example, the Frozen franchise is truly unmatched, so when revenue dropped in the Studio Entertainment division, no one was concerned since it was bound to drop after the incredible year they had last year with Frozen. According to reports, though, Disney is planning a sequel called Frozen Fever to keep the franchise moving (although we all know sequels are never as good as the original!) Still, if there’s anything Disney knows how to do, it’s make money.
So, what do all these Disney profits mean for investors? Well, it means that current investors would be wise to hang on to their stock as Disney’s growth in the future seems to be exponential. It also means that investors who want Disney stock need to be on the lookout for a good day to buy all while keeping in mind that they would be buying at a high point in the market. Either way, if you plan on holding Disney long term, you can’t go wrong.
What do you think about the growth of the Disney company?
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