The first half of the year has been rough for Walt Disney (NYSE: DIS) and its investors. The stock is down 39% at the midpoint of 2022.
As one of the more well-rounded media companies, there’s always something going on at the House of Mouse. Let’s take a look at some of the things that can help Disney stock bounce back in July.
Pixar’s Lightyear — the origin story for Toy Story‘s space ranger — was a bit of a flop at the local multiplex this summer. It generated just $117.7 million in ticket sales during its stateside theatrical run, and another $102 million internationally. Throw in the cut that goes to theaters and distribution costs and it’s a fair bet that Disney will have to write down a good chunk of its production budget.
Finances and potential controversies aside, only 5% of the country saw Lightyear at a movie theater. A lot more people are likely to see the animated feature later this week after it debuts on Disney+ on Wednesday. Critics and audiences gave Lightyear generally positive reviews. There was clearly a segment of the country that wasn’t pleased with the casting of Chris Evans over Tim Allen in the signature role. Others threatened to stay away as Lightyear features Pixar’s first same-sex kiss, a move that resulted in more than a dozen countries banning the film. Things should get better for Lightyear at this point.
Every quarterly report matters, and Disney has a critical financial update for the market after the close next Wednesday. Expectations are high for heady growth on both ends of Disney’s income statement. Analysts see revenue clocking in at $20.6 billion for the fiscal third quarter, up 21% from where it was a year earlier. They are also looking for adjusted earnings per share to soar 45% to $1 a share.
The reasons for double-digit growth on both ends of the income statement are fairly clear. Disney’s domestic theme parks have been generating record revenue and operating profits. Disney+ subscriber growth continues to impress. Folks are flocking to the movies again.
However, there are also concerns about how the House of Mouse will fare in an economic downturn. Will marketers contract their ad spending on Disney’s media networks? Will a recession pick up the pace of cord cutters from cable and satellite television plans where Disney is a star player? Will high gas prices send momentum at its theme parks into a tailspin? There will be a lot to dissect in next week’s quarterly update.
Marvel has been the gift that keeps on giving at Disney. The next big Marvel theatrical release won’t happen until Black Panther: Wakanda Forever in November, but Disney+ subscribers will get fresh content from the superhero hit factory on Disney+ later this month.
She-Hulk: Attorney at Law is a spinoff of the Hulk franchise. There’s truth in advertising, as the lead character is a female Hulk who also happens to be a lawyer. Disney is a media stock giant. The spigot is always running when it comes to new content. It’s hoping that its new series sees green in more ways than one.
Rick Munarriz has positions in Walt Disney. The Motley Fool has positions in and recommends Walt Disney. The Motley Fool recommends the following options: long January 2024 $145 calls on Walt Disney and short January 2024 $155 calls on Walt Disney. The Motley Fool has a disclosure policy.