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What Happened in the Stock Market Today

By Demitri Kalogeropoulos – Nov 28, 2016 at 6:31PM

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Why Disney and Time Inc. stocks outperformed as indexes fell on Monday.

Image source: Getty Images.

Stocks slipped on Monday, with both the Dow Jones Industrial Average (^DJI 0.41%) and the S&P 500 (^GSPC 0.56%) indexes finishing modestly in the red.

Today's stock market:


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Data source: Yahoo! Finance.

Oil prices rose ahead of a production meeting by OPEC, and that increase helped push the United States Oil Fund (USO -0.05%) higher. Yet gold was the big winner as prices of the precious metal jumped following three week of declines. The spike produced an 11% bounce for the highly leveraged Direxion Daily Gold Miners Bull 3X ETF (NUGT 1.50%).

As for individual stocks, Time (TIME) and Disney (DIS -1.83%) both stood out thanks to market-moving news.

Time Inc.

Time shares soared 18% following word that the content publisher has been targeted for a buyout. The New York Post reported that billionaire investor Edgar Bronfman Jr. offered to purchase the company for $18 per share, representing a 30% premium over Friday's closing price. Time's board of directors rejected the offer, according to the report, but that doesn't mean higher offers, either from Bronfman or from other parties, won't be forthcoming. 

Image source: Getty Images.

The company, which publishes under brands including People, Fortune, and Sports Illustrated, has struggled to adapt to the weakening advertising environment for printed content. In fact, ad revenue in that medium is down 9% over the last nine months (roughly tracking the drop in subscriptions). A 51% spike in digital advertising, though, has helped keep total revenue roughly even. CEO Rich Battista and his executive team aim to quickly move Time into a "digital-first" company, but they are far from that goal given that digital revenue currently makes up less than one third of the business.

The stock price rally suggests investors believe the buyout story isn't over yet. Hope that the company attracts another, higher acquisition offer is hardly a compelling reason to buy Time shares now, though. Investors are better off focusing on its operating trends. And with net losses piling up as circulation numbers dwindle, it's hard to get excited about this business today.


Disney shares modestly outperformed the market after the company scored a solid box office win. Moana, from Disney's animation studio, raked in $55 million over the weekend to become the second-highest grossing Thanksgiving opening of all time -- behind 2013's Frozen (also a Disney property).

Image source: Disney.

Moana's encouraging start adds to what's been a record year at theaters for the entertainment giant. Blockbuster hits so far include Pixar's Finding Dory, Marvel's Captain America, and Disney Animation's Zootopia.

The flush box office showing is goosing Disney's bottom line. Revenue from the studio business rose 28% to $9.4 billion in the fiscal year that just closed. Profits improved at an even faster clip, spiking 37% to $2.7 billion. That outperformance helped take all of the pressure off of Disney's media business, which has been struggling as consumers continue to move away from expensive cable TV packages. Despite no growth in that segment, Disney's overall operating income rose by a respectable 7% in the last 12 months. 

Investors have still made Disney one of the worst-performing stocks on the Dow this year. That's shortsighted, in my view. Yes, since it is prone to costly flops, the box office business is less reliable than the media segment. But Disney also routinely gets help from its parks and resorts properties and its extremely profitable consumer products division. Each of those revenue streams kicked in to produce the company's sixth straight year of record operating results -- and they should create many more records over the coming years.

Demitrios Kalogeropoulos owns shares of Walt Disney. The Motley Fool owns shares of and recommends Walt Disney. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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