Lynch Picks: Buy Walt Disney (DIS)
Despite its recent ups and downs, $DIS has kept expanding because of its strong business.
The pandemic closed theaters and amusement parks, restricting business revenue in 2020 and 2021, making the past few years difficult for the entertainment industry. Reopenings over the past year have significantly increased business. However, the streaming industry has faced fierce competition that has necessitated significant content spending.
Disney entered the streaming market by purchasing a share in Hulu in 2009; after acquiring 21st Century Fox in 2019, it now has a 60% majority stake in the service. In November 2019, Disney launched its leading streaming service, Disney+, to capitalize on this growing market, and the site soon attracted more subscribers than any other platform, significantly changing the market.
Source: Statista
For over ten years, Netflix almost owned the streaming market, but Disney's recent entry into the space has changed everything. The market share of Netflix was 23% in the first quarter of 2022, while the combined market share of Disney's Hulu and Disney+ was 25%. Not surprisingly, the market share of $NFLX has shrunk to 21% in Q3 2022, compared to Disney's 25%.
With a combined 235.7 million subscribers, Disney outnumbered Netflix's 223.1 million in Q3 and held the top spot in the fourth. Disney's programming is robust, and its future in the industry is promising, as seen by the company's ability to dominate streaming in just three years.
As a contemporary entertainment, Disney is not only dependent on movie releases; its theme parks and television businesses are both enormously successful. But with Avatar: The Way of Water's debut performance, Disney investors didn't get the positive, even amazing news they were looking for about their firm these days. However, the stock price and valuation trade reasonably, and a buy position is justified.
