Both companies have been plagued by concerns about the influx of competition and the fierce battle for subscribers.
Despite Disney’s huge library of movies and shows thanks to its own studio, as well as Lucasfilm, creators of Marvel, Pixar and Star Wars, investors worry that this glut of content won’t boost streaming subscription growth enough to offset the slowdown in traditional streaming. and cable TV companies.
“Disney+, Hulu and ESPN+ have the broad and managerial conviction to be, over time, a formidable global broadcaster,” JPMorgan analyst Philip Kosik said in a Tuesday report. But, he added, “that’s not necessarily as good a job as Disney’s work on television.”
Traditional media companies like Disney used to rely a lot on lucrative ad sales and affiliate fees from cable companies to move their channels, but the shift to streaming has turned that model on its head. Investors are now more interested in the margins flowing in and not just the bragging rights that come from the number of subscribers to the company.
“The market appears to be overtaking remunerative media companies, as it did in 2020 and 2021, simply for its expectations of future streaming subscriber growth,” MoffettNathanson analyst Michael Nathanson said in a report last month.
“It now appears that investors are looking at further down the income statement — and also, finally, looking at the cash flow statement — to try and quantify the underlying steady-state profitability of the pivot for direct-to-consumer content delivery,” Nathanson added.
Nathanson cut his price target at Disney in March from $165 a share to $150, in part due to concerns about low profit margins.
The Florida controversy remains a problem for Disney
Whether the Florida controversy has an actual impact on Disney+ subscriptions, attendance at Disney-owned ABC and ESPN movies, theme parks and ratings is up for debate.
However, one analyst noted that the “Don’t Say Guy” case could harm the company in another way, if more liberal Hollywood celebrities decide not to work with the House of Mouse.
“One of the most important [Disney] The origin is her brand, then her talent. “If the controversy leads to a loss of key creative talent, it will obviously be a negative,” Alan Gould of Loop Capital said in a report earlier this month.
Whatever happens, it’s clear that Wall Street hasn’t been satisfied with Disney’s performance since Tangling took over from Iger in February 2020.
Disney shares are now hovering near their lowest levels since November 2020. Undoubtedly, Tangle has taken a bad hand since his tenure coincided with the onset of the Covid-19 pandemic in the United States, an event that significantly slowed tourism and leisure activities such as going to watch movies.
Disney should have a big event in 2022 at the box office
But some hope Disney can turn things around soon.
Michael Morris of Guggenheim Securities wrote in a report late last month that the park business should rebound thanks to new attractions like “Star Wars: Galaxy’s Edge” and “Avengers Campus,” increased visits from foreign travelers to major resorts in Orlando and California, and the reopening of the parks. International and entire cruise lines.
JPMorgan’s Cusick cited Disney’s strong slate of films this summer and later this year as positive.
Box office revenue should start to pick up thanks to the upcoming releases of Marvel’s Dr. First sequel to “Avatar” released in 2009 (Avatar 3 will follow in 2024)
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