There are two pillars to Disney’s Stock now, and everything else is just feeding into two big numbers: subscribers and park revenue.
For everybody who was hoping to see Bob Chapek removed as the CEO of The Walt Disney Company, it’s time for you to pick another target. After a stellar earnings report out of Disney, the newest Bob is not going anywhere anytime soon. Even at a time when Marvel is struggling to succeed, when Star Wars is stumbling, when multiple animated feature films can’t get a box office win, and Disney Cruises are essentially sidelined still… it doesn’t slow down Disney’s stock even a bit. You might be confused about what’s happening if you don’t understand that Disney’s company is being driven by two forces: Disney+ and Walt Disney World.
The domestic Disney Parks did ridiculous amounts of revenue with Disney World leading Disneyland by so much that Disneyland just doesn’t even come close. It never has, but it’s becoming so extreme now that Disneyland might as well be a regional exercise for Disney and Disney Word is the crown jewel of the company. Films don’t touch Disney World. It is the behemoth of the company. What investors have to be wondering now is where is the ceiling for what guests will pay, and how far can you go with services that don’t really provide any benefit before the dam break? If that number continues to be higher (even after stimulus checks are spent), then Disney is going to keep going higher with the Disney World prices. Does that make it a once-in-a-few-years experience for the middle class? Sure. Do they care? No. They want money. This makes money; huge piles of money.
Meanwhile, almost everything is riding on Disney+. Investors don’t care if Star Wars Galactic Starcruiser fails at this point. They don’t care if Boba Fett falls flat. They’re not checking ratings for Black Widow, Loki, or WandaVision. That stuff matters to consumers, but there’s a totally different, objective metric that investors are paying attention to: subscribers. It can sink Netflix from its magnificent perch and it can raise Disney’s perception like no other. It swings investment ideas from quarter to quarter. There’s a reason that Disney really wanted to sink AMC during the pandemic — it’s all about streaming now, and even huge blockbusters are only going to be there to boost streaming with the potential for profit on the front end at cinemas. Who would ever have thought we’d be in a world where Marvel literally doesn’t matter to Disney’s stock? But any part of Disney’s studios can fail horribly, yet if the subscriptions go up, investors don’t care.
More or less, that may be because consumers don’t care. Without the ability to vote at the box office with their money, consumers just funnel cash to Disney for their streaming platform. Without a corollary to Walt Disney World, guests may be willing to pay until they’re going in debt just so their child gets to walk down Main Street USA. And for that reason, investors don’t care about “the magic”. They don’t care if Harmonious sucks. As long as consumers will shovel money at Disney, investors are going to keep buying into a Disney dream that seems to have no cap.
For more on what’s going on with the Disney stock situation, I highly recommend watching Valliant Renegade and Kamran Pasha in their latest deep dive on the situation. It would seem we agree on nearly everything about what’s happening:
So what are your thoughts? Is there a bubble for all of this increased consumer spending? How far can it possibly go and how far can Disney’s stock rise? Let me know in the comments below and keep reading That Park Place for all the latest news that should be fun!