The entertainment industry is a pretty big deal these days. It has provided us with moments of escapism to help keep our minds off the pandemic, the recession, and the news in general through the past few months. Now let's take a closer look at some of the publicly traded entertainment companies that could be making moves in September.
Roku (ROKU 0.15%), Dave & Buster's (PLAY -4.99%), and Walt Disney (DIS 0.18%) are some of the top entertainment stocks that should be making waves this month. Let's peel back back the curtain for a closer look.
Image source: Getty Images.
Roku
We live in exciting times for video entertainment. The catalogs of available digital content continue to expand, and families have gone from wondering what's for dinner to wondering what they will stream that night.
Roku is leading the charge. It had 43 million accounts on its platform at the end of June. Roku may be free to use, but it still cashes in through advertising revenue and royalties it collects from many of the thousands of apps on its platform when Roku helps them land a premium customer.
Roku hit all-time highs on Tuesday, and it's easy to see why the market's giving the stock a warm embrace. The pandemic has made us streaming homebodies. However, Roku's audience growth and the stickiness of its platform were already on display well before COVID-19 hit home.
| Quarter | Active Users | Hours Streamed | Days in Quarter | Daily Hours, Average Per User |
|---|---|---|---|---|
| Q1 2019 | 29.1 million | 8.9 billion | 90 | 3.4 |
| Q2 2019 | 30.5 million | 9.4 billion | 91 | 3.39 |
| Q3 2019 | 32.3 million | 10.3 billion | 92 | 3.47 |
| Q4 2019 | 36.9 million | 11.7 billion | 92 | 3.45 |
| Q1 2020 | 39.8 million | 13.2 billion | 91 | 3.64 |
| Q2 2020 | 43.0 million | 14.6 billion | 91 | 3.73 |
Data source: Roku quarterly reports.
Roku topping 40 million users during the second quarter is impressive, but also note how the average consumption per user -- the final column -- keeps inching higher. We're not giving up the desire to binge shows and movies anytime soon. Something to watch this month is if Roku can negotiate the terms to get HBO Max and Peacock on its platform. If deals aren't able to be reached it will be interesting to see if HBO Max and Peacock sputter without Roku support, something that will benefit Roku in future negotiations with the next wave of shiny new streaming services.
Dave & Buster's
One of the more intriguing earnings reports this month will be Dave & Buster's. It steps up on Thursday afternoon with its fiscal second-quarter results. A leader in the "eatertainment" niche that blends casual dining with entertainment, Dave & Buster's operates 137 big-box locations that feature a massive video game arcade, casual dining room, sports bar, and other high-energy diversions.
The pandemic was understandably rough for Dave & Buster's. Comps plunged 58.6% in its fiscal quarter ending in April with all of its locations having to close down midway through the reporting period. It's been starting to open up locations since the end of April in markets where municipalities allow indoor dining and gaming. Naturally we'll get an update on how many of its stores are open now -- and more importantly how business is holding up -- in next week's report.
It won't be the same in the new normal. Dave & Buster's has limited guest counts, reconfiguring restaurant dining and video game layouts to promote social distancing. This will be a gradual process, but with the stock already more than tripling off of its mid-March low there will be expectations of noticeable sequential improvement in the latest quarter.
Disney
There's never a dull month at Disney, but September is going to be particularly interesting. Mulan hit Disney+ as its first premium add-on this weekend. Disney chose to release the film that was initially supposed to hit the theaters in March as a premium offering, charging Disney+ subscribers $29.99 for access to the stream.
It probably wasn't a good look to see #boycottMulan trending on social media on Friday morning just as the film became available. The movement was inspired by comments made by the lead actress supporting the police in the recent Hong Kong protests. It will still be interesting to see how what could've been one of this year's biggest movies fares as a digital release. If it's a hit it could make things interesting for the studios and painful for multiplex operators.
This could also be the month that Disney finally gets the green light to open its original Disneyland resort in California. Its Florida sibling Disney World has been open since mid-July, and by most accounts a success at least in terms of guest health and safety.
With the economy in an iffy state consumer discretionary stocks in general and entertainment stocks in particular are going to have to earn their upticks. Roku, Dave & Buster's, and Disney are three stocks that are worth watching in September.
