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Why Disney Stock Rose Today

By Joe Tenebruso – Oct 13, 2020 at 6:31PM

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The media giant wants to become an even more powerful force in the streaming market.

What happened

Shares of Walt Disney (DIS -3.52%) climbed 3.2% on Tuesday, after the entertainment titan said it would reorganize its operations to better focus on its fast-growing streaming business. 

So what

Disney+ is gaining customers at a torrid clip. More than 60 million people have already subscribed to the streaming service. Across all of Disney's streaming platforms, which also include Hulu and ESPN+, that figure rises to over 100 million. 

A compass pointing to the word growth.

Investors celebrated Disney's new growth plan. Image source: Getty Images.

To better support the growth of these services, Disney's teams will produce more original content for its streaming audiences. The company will also restructure several of its business segments, to more closely align them with its new streaming-focused strategy.

Now what 

The coronavirus pandemic has taken a heavy toll on Disney's parks and movie theater operations. COVID-related closures led to a plunge in traffic and profit in the third quarter, forcing Disney to lay off 28,000 employees. 

However, stay-at-home orders and other social distancing measures led millions of people to try out Disney+. With the streaming service enjoying strong reviews, many of these people are likely to remain loyal customers.

Although Disney+ is not yet profitable, the service has the potential to be a powerful source of long-term profit growth for the entertainment giant. Disney knows this, and it's doing everything it can to maximize the potential of what could become the crown jewel of its global entertainment empire.

Joe Tenebruso owns shares of Walt Disney. The Motley Fool owns shares of and recommends Walt Disney and recommends the following options: long January 2021 $60 calls on Walt Disney and short October 2020 $125 calls on Walt Disney. The Motley Fool has a disclosure policy.

Stocks Mentioned

Walt Disney Stock Quote
Walt Disney
$95.93 (-3.52%) $-3.50

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