Is the global streaming market already saturated? think! Disney (WKN: 855686) impressively proves the opposite. Total Disney+ subscriptions rose to 152.1 million in the third quarter. Hulu also has 46.2 million and ESPN+ 22.8 million subscribers. Combined, the three Disney streaming services now have more than 221 million customers. By comparison, Netflix, the leader in streaming for many years, had 220 million subscribers at last count.
But living in the fast lane also costs a lot of money. In the fiscal third quarter, Disney+, Hulu and ESPN+ had a combined loss of $1.1 billion. This is due to the higher cost of the content. Disney’s average revenue per users for Disney+ fell 5% this quarter in the US and Canada.
Like Amazon and Netflix, Disney+ now also has a cheaper price variant where commercials are played. It costs $7.99 per month in the US. The price of the ad-free version also increases by a whopping 38% to $10.99.
Those are Disney’s numbers for the third quarter
Sales rose to $21.5 billion.
Earnings per share rose to $1.09.
The number of Disney+ subscriptions reached 152.1 million.
Disney’s theme park division saw sales rise 72% to $7.4 billion. In the same period last year, it was only DKK 4.3 billion. Disney reports an increase in visitor numbers, occupied rooms and cruise ships.
Business is booming again in the theme parks
The new Genie+ and Lightning Lane products are helping to increase average ticket sales per They were introduced to allow park guests to skip the line for the main attractions.
Various attractions have also been reintroduced, such as character encounters, theatrical performances and nighttime events at Disneyland. This has allowed the parks to increase capacity, CEO Bob Chapek said on the conference call with analysts. After the Corona closures, Disney had limited attendance and introduced a new online reservation system to control the crowds.
Disney is on the right track
The company has been profitable again since the summer of 2021. The free cash flow also points slightly upwards. For the past 12 months, that’s more than $1.5 billion. But let’s also not forget that the streaming industry is expensive. While Disney has excellent content in its catalog, customers are spoiled and regularly expect something new. Netflix and Amazon can tell you a thing or two about that. Here I see Disney clearly in pole position. Compared to its competitors, the company is less dependent on expensive new productions.
Disney stock: That’s my price target
The stock is currently trading at $112.43 (all data as of August 11, 2022). The price/earnings ratio of 75.7 does not look favorable. But I think the potential is still great. Long-term, I estimate the stock’s fair value at around $210. A price return of 87.5% is therefore possible.
Disney Stock: Don’t Forget the Dividend
The mouse company suspended them at the beginning of the Corona make. But many analysts estimate that payouts will start to bubble up again from 2023. I haven’t given up hope either. The financial strength may show in the medium term. The balance is slowly stabilizing. I find it remarkable that Disney has been able to significantly reduce its debt load since the summer of 2020. The debt level, that is, the ratio of debt to equity, has since fallen from 64.7 to 50%. It is fantastic!
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Henning Lindhoff owns shares in Disney. The Motley Fool owns shares of and recommends Walt Disney and recommends the following options: long the January 2024 $145 call on Walt Disney and short the January 2024 $155 call on Walt Disney.