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Can Disney+'s Solid User Base Bail Out Battered Disney (DIS)?

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Disney’s (DIS - Free Report) streaming service Disney+ has now more than 50 million paid subscribers, a feat achieved within five months of its launch.

The company’s solid user base expansion within such a short span reflects its strong content portfolio. Notably, Disney extended its Disney+ service to eight European countries and India in the past couple of weeks.

In fact, India represents eight million of Disney+’s 50-million paid subscriber base. Disney launched the streaming service in India on Apr 3 and clearly benefited from the coronavirus-forced 21-day lockdown across the country.

Coronavirus Dents Disney’s Prospects

The coronavirus (COVID-19) outbreak is hurting Disney’s businesses. Shares have plunged 30.1% on a year-to-date basis, underperforming the S&P 500 composite’s decline of 17.3%.

Disney, which has a Zacks Rank #4 (Sell), continues to suffer losses from the closure of its theme parks and cruise ships. Further, cancellation of sports events is expected to affect its ESPN business.

Disney kept California and Florida parks closed for an indefinite period. The company also shuttered its Paris resort and theme parks in Hong Kong, Shanghai and Tokyo in response to the coronavirus outbreak.


Moreover,  the negative impact on Disney’s ad sales is similar to the adversity faced by social media companies like Twitter (TWTR - Free Report) and Facebook (FB - Free Report) .

Notably, Twitter withdrew its revenue and operating income guidance for the first quarter of 2020 due to the worsening coronavirus impact on the global operating and economic environment as well as advertiser demand. Facebook admitted that its ad business took a huge beating in countries severely hit by the novel coronavirus pandemic. (Read More: Coronavirus Hits Ad Sales of Facebook, Twitter and Others)

Per Disney management, it is difficult to estimate the near-to-medium term performance of its business losses in the aftermath of the COVID-19 outbreak.

Disney+ Robust User Growth a Key Catalyst

Disney has been bolstering Disney+ content portfolio to gain users currently on lockdown due to the pandemic-imposed physical distancing. Solid content portfolio is also expected to help Disney gain a competitive edge over Netflix (NFLX - Free Report) , Apple TV+ and Amazon prime video in the streaming space.

Apart from the upcoming Artemis Fowl, Disney launched Frozen 2, three months ahead of schedule on Disney+ in the United States on Mar 15. Disney and Pixar’s Onward is also available on Disney+ from Apr 3 onward.

Moreover, Disney reshuffled its upcoming movie release dates with Mulan now set to open on Jul 24 followed by Jungle Cruise on Jul 30. Much-anticipated Marvel Studios’ Black Widow is scheduled for Nov 6 while The Eternals will hit the screens on Feb 12, 2021.

The strong slate of movies s along with surging popularity of Disney+ bodes well for Disney’ once the impact of the coronavirus subsides.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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