By
Godfrey Benjamin
March 26th, 2024
Disney (DIS) stock price is increasing as the company has announced that the number of Disney+ subscribers is growing.
The Walt Disney Company (NYSE: DIS) jumped nearly 7% higher in the after-hours session on Wednesday after the company announced its streaming service Disney+ has more than 50 million subscribers. DIS stock was rising 6.84% to $107.98 in pre-market on Thursday.
These are the great results if we take the fact that the Disney+ service has been launched less than five months ago, and apparently had 28.6 million subscribers as of February 3.
These “paid subscriber” numbers also generate subscribers who are bringing in revenue for Disney but are not paying for the service themselves. For example, Verizon Communications (NYSE: VZ) is offering a year of free Disney+ to some customers. It also includes over 8 million subscribers in India, where Disney+ launched last week as part of Hotstar, a popular streaming service that Disney became the owner of after it acquired Fox.
Disney’s service was also pretty much growing on the international level as well. It has been launched in the U.K., Ireland, France, Germany, Italy, Spain, Austria and Switzerland during the last few weeks.
Can Disney Reach Netflix?
Kevin Mayer, the chairman of Disney’s direct-to-consumer and international business stated:
“We’re truly humbled that Disney+ is resonating with millions around the globe, and believe this bodes well for our continued expansion throughout Western Europe and into Japan and all of Latin America later this year.”
Just for comparison, in its latest earnings report, Netflix (NASDAQ: NFLX), which acts on a pretty much more global level, said it has 167 million paid memberships worldwide.
One of the most probable scenarios for such a rise of subscriptions lays in the fact that the novel coronavirus (COVID-19) pandemic has recently increased demand for the streaming services as people are forced to stay indoors to curb the spread of the virus that has killed at least 88,415 people worldwide.
Wells Fargo Downgrades Disney
However, that it isn’t all nice and dandy for the companies like this, proves the latest downgrade Disney got by Wells Fargo.
Wells Fargo analyst Steven Cahall downgraded Walt Disney (DIS) stock explaining in a report that he is predicting the studio’s theme park division will take two years to return to normal attendance in the coronavirus pandemic era. He downgraded the Disney stock to equal-weight from overweight, with a price target of $107.00.
Cahall went on to explain:
“We don’t think Parks can get back to anything close to full capacity until testing and/or vaccines are far more ubiquitous. We’ve thought the value creation from Disney+ (and later on Hulu) would be enough to more than offset a declining environment for media networks. We still believe in that, but we didn’t foresee this unique and severe downturn for Parks.We see the limiting factor as health-care technology as assets like Walt Disney World will either need to operate with social distancing in-place – significantly limiting capacity – or a vaccine will need to be widely enough available that the population will again feel safe in such a gathering.”
In the near term, Cahall said the Disney board will likely not dial back its heavy investments in its Direct-to-Consumer initiatives. Given the company already has relatively high leverage following its Fox Corp asset acquisitions, Cahall said the Disney board “will evaluate the dividend.”
Wells Fargo cut its 2020 dividend per share estimate from $1.83 to 87 cents. The firm has also cut its fiscal 2020/2021 EPS estimates from $5.06/$5.91 to $2.66/$2.42.
The Disneyland Resort and the Walt Disney World Resort are for now closed indefinitely due to coronavirus outbreak, and Walt Disney Co. executive chairman Bob Iger on Tuesday noted talks are underway about best practices for when the North American theme parks can reopen.