For a sum of $4 billion, Disney acquired the rights to Marvel Entertainment following the then-record box office success of Iron Man – the first film in the Marvel Cinematic Universe (MCU).
While that is a pretty penny to fork over, Disney has more than made its money back from the investment.
Even before the release of its latest blockbuster, Black Widow, the 23 MCU movies made since Disney acquired Marvel have grossed more than $22 billion worldwide.
And that doesn’t even include the additional revenue the MCU has been able to make for Disney by attracting new users to the Disney+ streaming platform. Beginning in January 2021, marvel has now released three popular MCU series exclusively to Disney+ subscribers – with a dozen more series currently in the works.
Disney has made every effort to draw more subscribers to its streaming platform as it competes with the likes of Netflix and Hulu for viewers. In recent months, Disney has begun offering the ability to stream movies that are currently in theaters from home on Disney+ for an additional fee.
While it seems like a shrewd strategy that allows users that may not wish to go to the theater the ability to catch the latest releases, an issue popped up this week that could have a big effect on how Disney operates in regards to simultaneously streaming theater releases.
While some see it as a potential problem, the only thing I see is a profit opportunity.
The theatrical release of Black Widow has been a resounding success so far, becoming the fastest movie to gross $100 million since the pandemic began.
The film has also made more than $60 million from Disney+ rentals.
And therein lies the problem.
Black Widow’s star actress, Scarlett Johansson, is suing Disney for breach of contract, claiming that she had received promises from Marvel that the movie’s release would be strictly in theaters. Johansson’s pay for the film was largely based on box office receipts, and she is claiming that Disney did not honor the agreement to delay the ability to stream the movie – a time period which has traditionally been 90 days.
Since news of the suit first broke, DIS stock has fallen more than 3%. Investors are seemingly wary of not only how much additional money Disney will need to pay Johansson, but the potential for other actors to come forward with similar claims while contract terms regarding streaming access are still ambiguous. There’s also concerns over what concessions Disney will need to make to its talent going forward if it continues to pursue the dual-release model.
Ultimately, I think this ends up being a small drop in the bucket for the titan that is Disney. They own two of the most popular franchises in the world in Marvel and Star Wars, and will continue to pump out films and series that generate billions in revenue for years to come.
So, while the stock takes a dip from this growing pain of the streaming platform that’s still in its infancy, I see it as a fantastic opportunity to pick up shares of Disney at a solid discount.
Earnings report to watchRetail has been one of the most long-suffering industries during the pandemic.
But as stores have now had ample time to reopen their doors to customers once again, investors are looking for big year over year improvement for from a slew of related companies.
Under Armour, Inc. (UAA) reports its Q2 2021 earnings report this Tuesday, August 3. Analysts expect a marked improvement from the same quarter in 2020, which saw in-store sales plummet due to COVID-19 restrictions.
Under Armour stock has performed relatively well over the last year as sales shifted to online platforms, but the market will want to see that things are starting to return to normal for the apparel maker.
Despite the potential for big improvements YoY, given UAA’s steady upward momentum over the last year, this earnings report may have to blow investors out of the water to move the needle much on the share price.
Trading tip of the weekUnderstanding risk is so important, especially in options trading.
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