What You Need To Know
Bob Iger, CEO of Walt Disney Co. (NYSE: DIS), expressed confidence that the company will achieve profitability in its streaming TV businesses by the fourth quarter of this fiscal year. Despite a loss of $216 million in the combined streaming businesses for the last quarter of 2019, the company has seen significant improvement compared to the previous year.
The streaming services include Disney+, ESPN+, and Hulu. Disney has been investing in streaming platforms to adapt to the growing trend of online viewing.
Meanwhile, Disney is facing a proxy battle with activist investor Nelson Peltz's Trian Fund Management LP, who is pushing for changes in Disney's business strategy and board appointments. Iger is determined to remain focused and not be distracted by the campaign.
Additionally, Iger addressed concerns about superhero movies underperforming at the box office, stating that it is not audience fatigue but the audience's desire for quality films. Disney has made efforts to reduce the number of Marvel Comics films and TV shows to prioritize excellence.
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Why This Is Important for Retail Investors
Growth Potential: The assurance of profitability in Disney's streaming TV business presents an opportunity for retail investors to tap into the growth potential of the booming streaming industry. As more consumers shift towards online viewing, investing in a company that is well-positioned in this market can yield long-term gains.
Diversification: Investing in Disney provides retail investors with a chance to diversify their portfolio. While Disney is primarily known for its traditional entertainment business, the company's foray into streaming TV offers investors exposure to a different sector, allowing them to spread risk and potentially mitigate losses.
Future Revenue Streams: The success of Disney's streaming ventures can translate into sustainable revenue streams for the company. Retail investors stand to benefit from potential increases in shareholder value as Disney's profits from streaming TV contribute to overall financial performance.
Competitive Advantage: Disney's commitment to improving the quality and reducing the quantity of its Marvel Comics films and TV shows demonstrates its ability to adapt to changing consumer demands. Investors can capitalize on Disney's competitive advantage in the streaming market, positioning themselves for potential long-term success.
Leadership Stability: Bob Iger's confidence in the profitability of Disney's streaming TV businesses instills a sense of stability and trust in the company's leadership. Retail investors may view this as a positive sign, indicating competent management that is capable of driving the company forward and delivering returns to shareholders.
How Can You Use This Information?
Here are some of the investing ideas that can be explored using this information:
Growth Investing
With the potential for profitability in Disney's streaming TV business, retail investors may consider a growth investing approach to capitalize on the company's expansion in the streaming market.
Growth investing focuses on stocks of companies expected to grow at an above-average rate compared to other stocks in the market; learn more in our article titled 'What is Growth Investing?'.
Dividend Investing
If Disney's streaming TV ventures generate consistent profits, investors might consider dividend investing as a strategy to benefit from potential dividend payouts as a shareholder.
Dividend investing targets companies that regularly distribute a portion of their earnings to shareholders as dividends.
Diversification
Disney's foray into streaming TV presents an opportunity for investors to diversify their portfolios by adding exposure to the booming streaming industry, thereby spreading risk.
Diversification spreads investments across various assets to reduce risk and volatility in a portfolio.
Innovation-Focused Investing
Retail investors interested in innovative sectors may find Disney's streaming TV business a compelling investment idea, given the company's efforts to adapt and thrive in the evolving streaming landscape.
Innovation-focused investing seeks out companies that are leaders in technological advancement, offering potential for significant growth as they develop new products and services.
Thematic Investing
The growth and profitability potential of Disney's streaming TV business aligns with the thematic investing strategy centered around the themes of digital transformation and changing consumer preferences in the entertainment industry.
Thematic Investing selects assets based on projected trends or themes believed to offer growth opportunities.
Read What Others Are Saying
Bloomberg: Peltz Publishes 'Restore the Magic' Plan for Disney
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Popular ETFs
Some investors prefer to invest in stocks via an exchange-traded fund for ease and reduced risk. Some popular ETFs include the following:
Large-Caps: Vanguard Mega Cap ETF (MGC)
Mid-Caps: Vanguard Mid-Cap ETF (VO)
Small-Caps: Vanguard Small-Cap ETF (VB)
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Value: iShares Core S&P US Value ETF (IUSV)
Emerging Markets: Vanguard FTSE Emerging Markets ETF (VWO)
Developed Markets: Vanguard FTSE Developed Markets ETF (VEA)
