Walt Disney 🌠

Disney has always been a strong and common long term investment for many. It’s innovation and size makes it an attractive investment. But has this changed in recent months with the impact of coronavirus?

One aspect of Disney’s empire is not slowing down, and in fact making the most of the worldwide lockdowns currently in place, is the streaming service Disney+.

Assuming just under 50 million paying subscribers (as they still give away a lot of subscription through partnership deals) they are still in the shadow of the streaming experts Netflix, who currently command an impressive 167 million paying subscribers.

While considered a stable investment the virus has seen a share drop in value for Disney. Movies and other productions on hold, theme parks closed, holidays cancelled, and trying to cover the costs for all your employees when only a fraction are still functional.

Recently Disney were at a five year low. They have slightly improved passed that but this will be leaving many investors feeling like they have been taken the mickey.

But what do the numbers show?

Not the cartoon picture of happiness you might have hoped for.

The issue with such a large company is the value is normally less than the sum of it’s parts. This is why you see larger firms breaking into smaller focused chunks rather than remaining under a single large blanket.

This appears to be the case with Disney. Even with the extremely heavy discount (almost a five year low) Disney is still considered to be an expensive purchase with relatively lackluster future protections.

Is Disney simply too big to fail or even succeed? Is this a double edged sword of the slow giant heading where it wants? Are you backing Disney or would you rather be believing in fairies?

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They are on my second tier shopping list - I still haven’t made up my mind about them because of the reasons you outlined.

They could be the next Netflix, or not, or that part may be dragged down by the other parts - the conglomerate discount.

It’s a tricky one to call. They’re still warming the bench for me, but they may be coming off.

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This is more of a short term concern but a very good point.

Obviously the parks in particular are going to suffer for while, even after the lockdown finishes, if we do experience the ‘deep recession’ that’s being forecast.

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I’ve got a handful of Disney shares I bought them pre crash at about a $120 a share.

I was looking to pick up more when they were approaching $90 but now, not so much. Bright future ahead though, this is definitely a short term pain, long term gain for Disney.

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News from Disney not paying some staff.

Stopping pay for almost half of its workforce will save Disney up to $500m (£400m) a month, according to the Financial Times.

They have said they will pay some benefits still, e.g. US healthcare.

It’ll be interesting to see how the ex-staff and the market react to this news. Lots of companies doing layoffs and stopping payments, but some are handling the situations and looking after the ex-staff better than others. We’ll find out soon which end of the spectrum Disney is on.

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It’s even worse, they stop paying their staff, yet will pay the dividends and also shielded an amount for bonus payments to execs.

Capitalism at its finest. The friendly mouse is showing his true colours.

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Starting the see some of the impact due to the lockdowns now.

While there is no doubt Disney will make it though, the real question will be how they recover in the short term and keep the cash flow high after they return to business as usual.

Also cancelled their dividend for half a year, at least.

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Shanghai Disneyland is set to reopen with new measures in place.

One of the main changes will be reduced capacity as visitor numbers are massively scaled back from its normal 80,000 a day. While the Chinese government has limited numbers to 24,000, Disney said guests will be “far below” that figure as it tries out new procedures.

While the revenue will be drastically lower and I suspect there will be some hesitation from guests to attend, it’s still some money coming in, and it’ll be a testbed for how Disneyland can slowly reopen across the globe.

Big rumours on their Florida park opening soon, so bought a short term call option and up 40% in hours. Apparently near close of the market it turned out the rumour was false, but futures are still up so hoping to cash in at market open.

Fingers crossed!

Hopefully it opens up high and there is enough liquidity in the market. Short term Disney is a very spice stock. They also recently lost an exec that was responsible for their TikTok deals and helping them engage more digitally.

Lots of mixed news and views right now!

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Options are fascinating. My expiry date is 22nd May, so negative theta is massively pushing the value of the option down, but likewise the IV spike and the increase in share price pushed it up.

It’s a fascinating tug-of-war.

Could have pushed the expiry date out further, but that would increase extrinsic value and thus the premium. I took it as a short term punt.

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Disney impressed with their Disney+ numbers.

What I found interesting is the plan to launch new cinema releases via the streaming platform, but charging $30 one time per title as a premium film (newly released.)

The film industry and cinema’s has long had an interesting relationship. Moving into direct releases and not have an exclusive window for cinemas might challenge this agreement in the future. COVID is creating a lot changes and potentially new opportunities.