Back to top

Image: Bigstock

Disney ETFs Likely to Benefit Materially From Mulan Release

Read MoreHide Full Article

The Walt Disney Company (DIS - Free Report)  may see a rally in shares following an announcement that its live-action movie “Mulan,” would go directly to Disney+ in the United Stateswith a third new release date (Sep 4) and a digital purchase fee of $30 on top of the monthly Disney+ subscription fee. The company postponed the theatrical release twice before. Preliminary data showed that Mulan encouraged a huge jump in Disney+ app downloads, per an article published on Yahoo Finance.

The article went on to elaborate that Sensor Tower, an app download research firm, told Yahoo Finance that downloads of Disney+ surged 68% from Friday, Sep 4 through Sunday, Sep 6, compared to a weekend earlier. Consumer spending in the app also skyrocketed 193%, which points to the fact that consumers are paying the $30 Mulan fee. Notably, the rental charges include the facility of re-watching of the movie.

Mulan’s Success is Crucial for Disney

Since Mulanis not a free-to-stream movie for Disney+ subscribers, we can expect it to be a meaningful contributor to the Disney’s ongoing quarter. The movie will have a theatrical release outside America. Disney needed such a boost as its latest financial results were not so inspiring.

Disney reported mixed third-quarter fiscal 2020 results on Aug 4. Adjusted earnings of 8 cents per share surpassed the Zacks Consensus Estimate by 118.6%. However, the figure declined 94% from the year-ago quarter. Revenues of $11.78 billion declined 40.3% from the year-ago quarter and missed the consensus mark by 6.9%.

The pandemic has affected segmental operating income by $3 billion, net of cost mitigations. In fact, due to the pandemic, Disney’s domestic parks and resorts, cruise line business and Disneyland Paris were shut down in the reported quarter. Shanghai Disney Resort re-opened in May and Hong Kong Disneyland Resort, despite reopening in late June, was closed again in July (read: Will Disney ETFs Suffer on Mixed Earnings Due to Coronavirus?).

What Lies Ahead for Disney in the Coming Quarter?

The stock Disney currently has a Zacks Rank #3 (Hold). Right now, analysts do not seem very hopeful about the company’s forthcoming performance. The Zacks Consensus Estimate for the September quarter’s earnings stands at 53 cents of loss per share, wider than 42 cents of loss per share expected a month ago.

Not only this, the Most Accurate estimate for the upcoming earnings is of a loss of 59 cents per share. This has resulted in an Earnings ESP of -11.85%. Disney shares (up 1.6%) have underperform the S&P 500 (up 2.3%) in the past one month.

Against this backdrop, below we highlight a few ETFs that are heavy on Disney. An ETF approach is better right now as it lowers company-specific risks.

ETFs in Focus

iShares Evolved U.S. Media and Entertainment ETF (IEME - Free Report) – Disney takes the second spot with 5.18% weight.

Communication Services Select Sector SPDR Fund (XLC - Free Report) – Disney takes the fifth spot with 4.61% weight.

iShares U.S. Consumer Services ETF (IYC - Free Report) – Disney takes the fifth spot with 4.56% weight.

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


The Walt Disney Company (DIS) - free report >>

ISHARS-US CN CY (IYC) - free report >>

ISHR-EUS MDA&ET (IEME) - free report >>

SPDR-COMM SV SS (XLC) - free report >>

Published in