The Walt Disney Company (WKN: 855686) has just had what is arguably the most difficult year of all time and is striking back. The number of people who test positive for COVID-19 is trending down in the US, paving the way for restrictions to be relaxed. This is good news for individuals and Disney alike. The House of the Mouse can cautiously begin reopening businesses that have had to pause. And with consumers finally having more entertainment options, the pent-up demand could be a boon to Disney shareholders.
These positive trends can partially explain why Disney’s stock is up nearly 50% over the past six months. But that’s not the whole story. Let’s go a little further to answer why everyone is talking about the stock.
The Disney parks in California will be full when they reopen
California has announced that amusement parks will be allowed to reopen from April 1, albeit with reduced capacity. After it was confirmed that it wasn’t a cruel April Fool’s joke, Disney had reason to celebrate. After all, that means Disneyland and the California Adventure Parks in Anaheim can reopen the hubs. Disney doesn’t break the numbers separately, but you can expect California’s parks to be a big contributor to the Parks, Experiences and Products segment, which generated $ 6.8 billion in operating revenue in 2019.
Southern California had some of the toughest coronavirus restrictions in the United States. People now want to go out again and they trust Disney to provide a safe environment. When Disney announced the “A Touch of Magic” experience, a limited dining and shopping event at Disney’s California Adventure Park, with tickets on sale for $ 75 per person, it sold out in a matter of hours. This pent-up demand makes it likely that the parks will be filled to allowable capacity once they are open, and that will allow Disney to raise prices.
What that means for investors
Disney’s other big business – streaming services – continues to do well. At the annual shareholders meeting, CEO Bob Chapek announced that Disney + has reached the milestone of 100 million subscribers. Combined with Hulu and ESPN + ‘s 51.1 million paying members, the company now has a total of 151.1 million subscribers. And it’s not finished with the expansion yet, as it is planned to offer streaming services in more countries in 2021.
2021 appears to be well on the way to being an excellent year for Disney and its shareholders. Theme parks, cinemas, resorts and cruise lines could generate operating income by the end of the year. In the meantime, the streaming business will continue to grow as the company expands into new countries and brings new content to the platform.
When you put all of this together, it’s no wonder Disney stock is causing a stir in the investing community. Long-term investors will do well to get Disney stock before it is clear to everyone that 2021 will be a great year for the entertainment giant.
The post Why is everyone talking about Disney? appeared first on The Motley Fool Deutschland.
This article represents the opinion of the author who cannot disagree with the “official” endorsement position of any The Motley Fool Premium Advisory Service. Questioning an investment thesis – even your own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.
This article was written in English by Parkev Tatevosian and on 3/16/2021 at Fool.com released. It has been translated so that our German readers can take part in the discussion.
The Motley Fool owns shares of and recommends Walt Disney.
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