“Dismal Disney”. That's the theme that's been pushing a lot of discussions of Disney (NYSE:DIS) lately, and with good reason. Seems like there are new layoffs at least once a week, as Disney attempts to stage some kind of rally and get its share price back up and running. Thanks to Disney+, however, it's a lot less dismal than it was just a few months ago. It's been the company's saving grace, and following Disney's recent Investor Day, we've seen just how much impact Disney+ has had.
The Next Netflix?
There has been a lot of discussion around what company will wind up as the next Netflix (NASDAQ:NFLX), and Disney seems to have the inside track with its Disney+ streaming service. The company reported it now has 86.8 million subscribers to its credit—by way of comparison, Netflix counts 73.08 million subscribers in the US and 193 million worldwide as of July 2020—and is on track to bring in more.
Many, many more, in fact. How many, many more, you wonder? By 2024, Disney believes it could credibly breach the 260 million mark. Given that the company has brought in 13 million new subscribers just in the last two months, such a projection is not that out of line.
Driving Value to Bring in Subscribers
It's going to take a lot of value to bring in those kinds of numbers, and perhaps more importantly, to keep them in the camp once they arrive. Thankfully for Disney, it already has those plans in place. The company revealed over 100 new Disney movies and shows set to arrive on the platform—how it generated these with the various COVID-19 restrictions in place is at best unclear—in the coming days and weeks ahead.
Better yet, the planned releases cover a range of new properties, from science-fiction cartoons to documentaries, helping to ensure the broadest possible reach. Three different Marvel-based series are in the works, as well as multiple “Star Wars” series. In something of an unexpected twist, Disney also revealed that it wasn't planning to undercut movie theaters in the way AT&T (NYSE:T) recently did with its HBO Max announcements. Disney has two Pixar films set to launch in 2022, and the Marvel Cinematic Universe appears to be rolling along nicely. The trend of converting Disney rides to movies is even set to carry on with the release of “Jungle Cruise”, among others.
Analysts Are Buying Their Tickets
The analyst consensus, based on our latest research, shows that the larger analyst community is on board with Disney as well. The company is not only one of the most-upgraded stocks around, but it also enjoys a consensus rating of “buy”. Moreover, the ratio behind the consensus has only become more bullish in the last six months; six months ago, the company had one “sell” rating, 12 “hold” and 12 “buy.” Now, it's one “sell,” six “hold,” and 24 “buy”, showing that the analyst community is all in on the House of Mouse.
The price target has likewise been on an upward track; in the space between last month and today, the consensus price target is up nearly $20 per share, going from $134.62 to $152.14. That's also well up from the target six months prior, which sat at $124.52. Given that Disney currently trades at $169.12 as of this writing, there may well be some price target shifts to come. Several such shifts have already happened; just in the last two days, six analysts have increased price targets.
Like the Song Said, It's All About Value
Perhaps the most amazing part of all this is that it comes on the heels of reports that Disney is planning a price hike for Disney+ access. It's going to $7.99 a month, which may not seem like a big move, but it's almost an extra $100 million a month.
Thankfully, it isn't likely to lose a lot of subscribers over this. Some, certainly—there's always a certain portion of any business that is so price-sensitive that it will jump ship over any increase—but that number is likely to aspire to a whole-number percentage. With nearly 87 million subscribers, that means less than you may think. Disney is poised to bring a lot to the table, though it could be doing more; it's got quite a few untapped properties as yet that have already been shot, and since it's just space on a server at this point, there's no reason to not make it available.
Disney may be charging more, but it's delivering still more than that. That sheer value, and the hopeful return of all the other properties, is why making an investment with Disney is still a smart play.
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