Disney and its shareholders are at one with the Force

By Jonathan Jackson. Published at Jun 3, 2019, in Features

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I was reading an article recently about which was the better investment: Disney or Netflix?

According to CNBC, had you invested $1000 in Netflix in 2009, it would be worth more than US$58,000 today. That’s a total return of 5700%.

A $1000 investment in Disney, on the other hand, would be worth US$7700, a gain of just 680%.

Of course, that's just a 10-year measurement.

Disney first traded on over the counter (OTC) markets in 1946 and listed on the NYSE on 12 November, 1957. It closed that day at US$13.57.

Disney's stock performance has always been greatly affected by the box office performance of its movies. In early days, at the time of Snow White and Cinderella it boomed, but Pinocchio and Fantasia was a bust.

This article published by Business Insider and first featuring in Global Financial Data explains why shareholders who got in on Disney while it still traded OTC would be happier than the Little Mermaid.

Movies can still be a barometer, but other factors are at play now. Walt Disney was a driving force, much like Zuckerberg drives Facebook or Steve Jobs was the face of Apple. Branding is also a major influence.

Which is why Disney’s creation of a $1 billion Star Wars theme park could be its next big move, bigger than the company moving into streaming TV to take on Netflix.

The Orlando theme park will open in August, but its twin opens today in Anaheim and should prove to be a happy place for fans, the company and shareholders alike.

Part of the reason shareholders should be happy is the entry price: A visit to Star Wars: Galaxy’s Edge will set you back $104 for a day pass on a ‘low-demand’ day, while regular and prime-time visits, on holidays and weekends for example, will cost $149 a day.

That’s money in the bank.

Disney is currently trading at $131.57 at a market cap of $236.7 billion and while the announcement of the opening of the theme park didn’t have much impact on the share price, financial results for the next two quarters are expected to be extremely positive.

Disney is also staggering the excitement, opening the theme park’s signature rides weeks or even months apart to keep levels of interest heightened. It’s a bold move, but one that will likely pay off with repeat custom.

If Disney knows anything, it is how to entertain a crowd.

In the end, you may be able to chill with Netflix, but you can thrill with Disney and that, to me, is a bigger drawcard.

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

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The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

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