The Walt Disney ( DIS Quick Quote DIS - Free Report) has suffered most from the coronavirus-induced closure of its theme parks and cruise business in the past year. The ordeal is expected to end shortly, with the company set to reopen its two California theme parks on Apr 30. The parks will follow the opening of Disney’s Grand Californian Hotel and Spa (Apr 29). Moreover, on May 2, the Vacation Club Villa at the Grand Californian will reopen. Further, Disney’s Paradise Pier Hotel and the Disneyland Hotel will reopen at a later date. Disney CEO, Bob Chapek, said in an interview with CNBC that at the beginning parks will operate at around 15% capacity. Markedly, California’s latest state guidelines permit parks to reopen with 15-35% capacity from Apr 1. The reopening is expected to boost Parks, Experiences and Products segment’s top-line growth in the second half of fiscal 2021. Markedly, segment revenues decreased 52.7% year over year to $3.59 billion in first-quarter fiscal 2021. Moreover, the segment reported operating loss of $119 million against the year-ago quarter’s operating income of $2.52 billion. COVID-19 hurt the segment’s profits by $2.6 billion. Strong Streaming Adoption to Aid Growth
Notably, Disney shares are up 7.8% in the year-to-date period outperforming the S&P 500 composite’s return of 6.2% over the same period. The outperformance can be attributed to robust Disney+ growth.
The media giant has been focusing on its direct-to-consumer business that comprises of Disney+, ESPN+ and Hulu (forms Disney bundle).
Of these services, Disney+ has been the most prolific in the past year. It has already crossed 100 million paying subscribers within a short span of 16 months (since its launch in November 2020) despite stiff competition from established players like Netflix ( NFLX Quick Quote NFLX - Free Report) and Amazon ( AMZN Quick Quote AMZN - Free Report) Prime Video. Strong content portfolio is helping Disney improve its competitive position. Notably, Disney recently got 15 Academy Award nominations, including three for the animated movie Soul on Disney+. The company trailed Netflix (35 nominations), but was ahead of Amazon Prime Video (12 nominations). Markedly new entrant in the streaming space, Apple ( AAPL Quick Quote AAPL - Free Report) , earned its first nominations for movies on streaming service Apple TV+ for Wolfwalkers and Greyhound. In fact, Disney now expects to see between 230 million and 260 million subscribers on Disney+ by 2024, which basically triples its prior guidance of reaching between 60 million and 90 million subscribers by 2024. Moreover, Hulu (including Hulu+ Live TV service) is expected to garner 50-60 million subscribers by the end of 2024 while ESPN+ is expected to reach between 20 million and 30 million subscribers. Across its streaming services including Hulu and ESPN+, this Zacks Rank #3 (Hold) company forecasts 300-350 million subscribers by 2024. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Disney plans to spend $14-$16 billion in global direct-to-consumer content expenses across Disney+, Hulu and ESPN+ in fiscal 2024 as it ramps up original series and films. The company plans to release 100 new titles per year that include 10 Marvel series, 10 Star Wars series, and 15 Disney live-action, Disney Animation and Pixar series along with an equal number of films, each. Zacks Top 10 Stocks for 2021
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