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The Walt Disney Company is one of the largest and most well-known entertainment companies in the world. The company was founded in 1923 and has since become a household name in the global entertainment industry. The Walt Disney Company operates through two core business units, Disney Media on the one side, with Entertainment Distribution, and Disney Parks, Experiences, and Products on the other.
The company also owns and operates a number of high-profile entertainment studios and broadcast channels, such as Fox, ABC, Marvel, ESPN, Twentieth Century Studios, Pixar, Hulu, etc.
Disney stock has been a mixed bag over the past decade, losing a bulk of its market value and discontinuing dividend payments, which have had adverse effects on the company’s performance. However, Disney has since managed to rebound and continues to attract millions of investors to its stock.
Prospective investors may be wondering what factors to consider before buying and whether investing in Disney stock is the right course of action in the long run. To answer this question, it is important to understand the key metrics of Disney and overview its stock performance to get a clearer picture of how the stock could perform in the future.
The Walt Disney Company has had mixed stock performance over the past five years. The stock currently stands near the 2018 level at $99.60, which is a steep decline compared to the near $200 highs reached in 2021.
The Covid-19 pandemic has been especially difficult for Disney, as lockdown measures nearly evaporated a large revenue segment of the company, namely its parks, and entertainment venues. This caused the company to stop paying dividends, as a measure to save cash for the ongoing operations of the business.
Dividend cuts dealt a blow to the stock, which has lost over 27% of its market value over the past 12 months.
However, despite the short-term difficulties, Disney has plenty of variables going in its favor. Its vast catalog of content and array of subsidiaries means that the company’s revenue streams are fairly well-diversified. The company’s bottom line is not in bad shape, either. According to the Q4 2022 financial report, Disney generated $23.5 billion in revenues and $1.28 billion in net income - both of these figures have increased YoY.
Overall, Disney is a company with a long track record of delivering value to shareholders and could be on the right track to regain some of its lost ground in the coming years.
"The company had gone through a very difficult period, exacerbated by a global pandemic. And more than anything, the company needed stability, needed to establish a set of priorities and focus on them. The only way you end up getting to success is by deciding what the opportunities are, and then organizing your people and your company to go after them." - Bob Iger
New investors should consider the relevant advantages and disadvantages of buying Disney stock before putting their capital at risk. The company’s stock performance has not been ideal over the past few years, which is why investors should conduct a cost-benefit analysis before investing.
While Disney stock has gone through a rough period after the Covid-19 pandemic, the stock has started to rebound in 2023 and could be a solid buy as a long-term investment.
Disney halted its dividend payments during the Covid-19 pandemic and does not pay dividends to shareholders as of 2023.
Disney had its IPO on the New York Stock Exchange in 1957 when the company listed 150,000 shares at $13.88 per share.