Category Investments

Stock Pick of the Week with Momentum Securities: 23 July – Walt Disney

26 July 2021 Momentum Securities

Momentum’s leading stockbroking division – Momentum Securities – will be bringing you their Stock Pick of the Week, each week.

The stock pick motivation is available as written content and a downloadable video.

This week’s pick: The Walt Disney Company
About: The Walt Disney Company, commonly known as Disney, is an American diversified multinational mass media and entertainment conglomerate headquartered at the Walt Disney Studios complex in Burbank, California.

Portfolio Manager for Momentum Securities, Wiehan van Zyl shares his insights.

Click here to download the video clip.

“This week’s stock pick is Walt Disney. Disney’s entertainment offerings are head and shoulders above any of its competitors. For one example, revenue from its 12 theme parks came in at $16 billion in the fiscal year 2020 which is a 61% year-on-year decrease.

That being said, it’s still miles ahead of NBCUniversal – a division of Comcast which has 5 theme parks which only brought in $1.8 billion in 2020. Sea World operators of SeaWorld Entertainment also has 12 theme parks but only came in at half of $1 billion in 2020.

Each of the components of Disney is the top spot - or close to top spot - in all of its categories. The company’s theme parks and resorts was its biggest category pre-pandemic, accounting for more than a third in 2019. The same year, Disney had 7 of the top 10 grossing films. In addition, Disney+ has been a huge success – recruiting more than 100 million paid subscribers since it launched in November 2019. It’s behind the leader Netflix, but it’s definitely closing in. The company believes that it can earn up to 216 million subscribers by 2024, potentially outspacing Netflix who have 208 million subscribers as of 31 March.

It’s turning to streaming not only to pick up the slacks from its closed theme parks but as the key to future growth. It acquired general streaming site Hulu in 2019 and it had started a similar site, Star, in international locations. Between these sites as well as ESPN+, Disney is trying to dominate streaming like it’s dominating all of it’s other categories and it definitely has the potential to succeed.”

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