Investors See 100 Million Reasons to Buy
Disney’s streaming service is booming. Is now the time to buy in?
The Walt Disney Company (DIS) continues its march towards entertainment industry domination.
This week, Disney announced that it had surpassed 100 million subscribers to its streaming service, Disney+, since its launch in November 2019.
To put that in perspective, Netflix has accrued just over 200 million subscribers since the inception of its streaming service in 2007.
Part of the meteoric rise in Disney+ subscribers can be attributed to the pandemic – as many of the top streaming services have also seen a boom in their subscriber numbers over the last year.
But there’s plenty of reasons to believe that Disney’s success in the “streaming wars” – along with other catalysts – could mean even more positive momentum for DIS stock.
Let’s take a look…
Where’s the money?
Through a series of big-ticket purchases over the last decade, Disney now owns some of the highest grossing franchises in the world – in addition to its own incredibly popular animated films.
The 2009 acquisition of Marvel has been an absolute cash cow for Disney. Since that time, Disney has cranked out 21 Marvel movies that have raked in anywhere from $370 million to over $2.7 billion each.
And with this summer’s expected release of the long-awaited Black Widow film – plus a host of other upcoming Marvel series and film projects – Disney figures to have tons of potential superhero revenue still to come.
Disney also has numerous series in the incredibly popular Star Wars franchise planned for the next several years. Those exclusive Disney+ releases are sure to continue to drive subscriber numbers up.
And with the end of the darkest days of the pandemic in sight, Disney has announced its intentions to begin a phased re-opening of its theme parks in April – adding yet another massive revenue source.
With the stars seemingly aligned for this entertainment giant, plenty of investors are considering jumping into DIS.
But here’s why I don’t think that’s a great idea right now…
How do I get some?
With the strong performance from Disney, even during the trying times of the last year that forced it to close its resorts, you would expect a move higher.
But I’ve always said that one thing that doesn’t lie is price action and price momentum.
And right now, I think there are so many stocks that are completely overbought – such as The Walt Disney Company (DIS), Live Nation Entertainment, Inc. (LYV), and several airline and banking stocks as well.
There’s no denying that Disney has had a great run. Since October, DIS has climbed an impressive 61%, even with its parks shuttered.
But that’s a level I don’t believe the stock can sustain, especially as a short-term decrease in streaming demand can be expected as lockdowns end.
I would not be looking for a long position right now. Even setting up a short position from these highs could be a very profitable play.
In the Spotlight: A Flood of Money is Coming…
The House of Representatives moved to pass the $1.9 trillion COVID-19 relief bill yesterday.
The bill is expected to be signed into law by Friday – meaning Americans could begin to receive $1,400 payments within days.
The wave of new stimulus money will likely result in a buying frenzy in the market.
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