Disney (NYSE:DIS) had grown into a seemingly unstoppable media force coming into 2020. It was coming off the success of Avengers: Endgame, which became the top grossing film of all time. Moreover, the company launched its much-hyped streaming service Disney+ in November 2019.
That string of success was challenged by the COVID-19 pandemic. Disney’s major advantages, which included its box office draws and theme parks, were rendered moot over the course of a brutal year. Fortunately, the launch of its highly successful streaming service proved timely.
Shares of Disney have dropped 3.1% in 2021 as of close on October 26. The stock is still up 39% from the previous year.
In Q3 2021, Disney reported revenues of $17.0 billion – up 4% from $11.7 billion in the third quarter of 2020. However, revenues were still down 4% for the first nine months of the fiscal year. Free cash flow rose 16% year-over-year in Q3 2021 but was still down 82% in the year-to-date period.
Disney’s streaming service reached 116 million subscribers in the third quarter. It doubled its subscribers from the previous year and beat out analyst expectations. Disney is on track to beat out Netflix’s (NASDAQ:NFLX) subscribers by the year 2025. That would make Disney the dominate player online and at the cinema by the middle of this decade.
The media giant should continue to benefit from the loosening of restrictions in North America. It has major releases on tap like Eternals and Spider-Man: No Way Home in 2021 that should provide a boost. I’m looking to snatch up Disney stock as it looks to break out of its current slump. It is still trading in solid value territory compared to its industry peers at the time of this writing.
