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Should You Buy Disney (DIS) Stock At This Price?

Is Disney Stock On Your List Of Stocks To Buy Or Sell Right Now?

In recent months, Disney’s stock price (DIS Stock Report) has been on one wild ride. DIS stock dropped to a 5-year low of $85.98 before bouncing back above $100. Investors have taken into account that Disneyland theme parks will not open anytime soon in the U.S. Although the disruption is expected to hit Disney again in the coming financial quarter, the pandemic’s economic effects won’t last forever, right?

Because Disney was on such strong footing before the outbreak. Its recovery could only take off once this whole virus “thing” eases. While the theme park business definitely suffered a blow from the pandemic, the launch of Disney+ is pulling the stock back up. Having said that, DIS stock will take some time to recover, and it may not be a buy just yet.

Disney Stock Is Not Out Of The Woods As Cinemas & Theme Parks Remain Shut

It’s only going to get worse. A rough second quarter report from Disney appears to be guaranteed. Yes, that doesn’t sound like Disney because the brand has been painting a picture that it should be the happiest place on earth. Disney has already lost more than one month of theme park revenue globally, with some closed as early as January.

As if this isn’t bad enough for Disney, the shutdown of movie theatres and the loss of live streaming on its flagship ESPN channel gave Disney another massive blow. The theme park closures remain the major threat to buying DIS stock. Disney stock remains down 32% from its 52-week high. Despite having a phased reopening of Shanghai Disneyland later in May, the date of the full reopening remains unknown.

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 Another point to note is the possible change in consumer behaviour. Even if all theme parks globally are reopened tomorrow, do we expect everyone to rush in just like before? Certainly some will still be cautious about visiting crowded places.

Is Disney+ A Blessing To Disney Stock?

The coronavirus pandemic hobbled Disney’s empire- except for one, major success story: Disney+. The movie streaming division couldn’t have come at a better time for Disney. Despite only 6 months old into the movie streaming market, Disney+ is emerging as a top competitor to Netflix (NFLX Stock Report).

While they may share some similar content, Disney+ has a new set of strategies. In particular, its offerings include more family-oriented movies. This is especially suitable for parents who are stuck at home with their kids during the lockdown period.

While competitors Netflix and Amazon frequently release darker, adults-only content, Disney+ will center on shows that the whole family can watch, says Disney+ Senior VP Content Agnes Chu.

It is comforting that Disney+ has managed to rack up 54 million paid subscribers globally in a short period of time. However, we must bear in mind that Disney+ would not achieve profitability any time soon. And that is OK. Looking back, it took Netflix nearly two decades to be where it is today anyway. But there’s a catch. Disney’s plan to use the proceeds from the theme park business and other profitable segments to fund the newly launched platform is taking a huge hit.

This makes it increasingly difficult to operate Disney+ services at a loss. But on the flip side, the company is still sitting on a decent amount of cash. Furthermore, it is temporarily suspending the payment of dividends, a smart move given the circumstances.

When Should You Buy Disney Stock?

To state the obvious, Disney is in a tough position. We still may not fully understand the level of cash burn during the present quarter. And that is what makes investors so cautious on when to buy in. The quarter ending in June could put things into perspective. Only then, investors can know how much Disney has suffered from the pandemic.  

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Also, when it comes to adding DIS stock to your portfolio, it would be helpful to see how long your investment horizon is. If you could hold for the next five to ten years, then it would be worth investing at the price now. It is not like Disney has to build theme parks all over again. The theme parks are already there. Movies are ready to roll out once the economy reopens. We just need to wait.

By Joe Samuel

Joe Samuel is a dedicated stock market researcher and financial contributor. His love for the stock market started at a young age learning from his grandfather. Joe earned a bachelor of science degree in corporate finance and business management. After finishing college, he went the route of an entrepreneur starting numerous businesses and eventually became a financial contributor to a number of outlets including Seeking Alpha, Invesitng.com, and actively contributes to FactSet. At StockMarket.com, Joe looks for emerging stories. One of his traits is identifying new trends before they become mainstream. Whether it’s a biopharmaceutical company debuting a novel treatment or the next technology start-up developing a new platform, Joe looks to be on the cutting edge of that trend.

After years of living in New York, he made the move to Miami, Florida where he’s become an active member of the finance community. Joe has worked with early-stage companies in marketing and consulting capacities, which has given him an opportunity to see what makes companies tick. His viewpoint is that while corporate news is vital to any investment, it’s what isn’t “right in front of you” that can make a good investment great. His approach to the markets is one that aims to deliver information that might not be well-known. But through deep research and diligence, Joe has written about and been able to uncover time-sensitive information when seconds matter in the stock market today.

Joe enjoys covering several stock market sectors. These include commodities, finance, biotechnology, and technology; specifically AI & machine learning. His no-nonsense approach to the market gives readers a cut and dry view of the news that matters most and topics beginning to emerge as new trends in the stock market. He was early to the table with calls on things like the last gold rush in 2019 and has been able to identify influential events and how they could impact certain industries.

During his free time, he enjoys spending time with his family and polishing up one new stock market trends. He’s also an avid car enthusiast with a passion for classic and muscle cars.

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