Walt Disney (DIS -0.12%) shareholders had high hopes for the entertainment giant coming into 2021 as sales began to rebound from an awful pandemic year. But they were disappointed, as Disney stock has tumbled 18% so far this year, at the same time as the S&P 500 has increased 23%. Many investors are looking forward to a new year with more growth opportunities. Should you wait until then to buy in? Or is Disney a buy this month?
Whether you want at-home or away-from-home entertainment, Disney's there for you
Disney's name is synonymous with entertainment. It owns 12 global theme parks plus resort areas and cruise lines, providing some of the most prized vacation destinations for families. It also produces many of the biggest blockbuster films, including many under other studio names that viewers may not realize fall under the Disney umbrella. It also owns the rights to many studio franchises that furnish both its studio arm and parks segment with seemingly endless sales opportunities -- think the Frozen movies, and Star Wars. Some recent examples include both a new Star Wars ride and a new Avengers experience in Disney theme parks. As long as the creatives at headquarters keep dreaming up new titles, films are churned into various forms of cash creation that keep the company chugging smoothly along.
Image source: Walt Disney.
As for in-home entertainment, Disney owns television and cable networks, and most importantly these days, three streaming channels that were a huge success under lockdown. The Disney+ premium content channel launched in November 2019, which turned out to be auspicious timing as lockdowns followed just a few months later. Its streaming successes also include Hulu, which Disney fully acquired in 2019, and premium sports streaming channel ESPN+. All three contributed to a giant leap for Disney to become a fully functioning and competitive streaming company, rivaling the traditional streaming leader, Netflix.
Disney+ in particular exceeded expectations as it began its global rollout. By the end of 2020, after being live for just over a year, the channel had 95 million paid subscribers. It also helped Disney stock gain 26% last year. Although that number has continued to rise, it's decelerating, and it didn't meet's management's original goals for the 2021 fourth fiscal quarter, ended Oct. 2. Disney+ added only 2.1 million subscribers in the quarter on top of the third-quarter count, for a total of 118.1 million, and that didn't make investors happy.
Management, however, remained upbeat about meeting its overall goals to hit between 230 million and 260 million subscribers by 2024. CEO Bob Chapek said the process getting there wouldn't necessarily involve linear growth, but could be lumpy. There are many reasons to be as confident as he is, most obviously because Disney+ isn't even available to most of the world right now. It's slowing down in its current markets, but it has many more to conquer. It launched in 60 countries in its first two years and plans to launch in 50 more in 2022, and it expects to be in 160 countries by 2023. That gives it plenty of leverage to add new subscribers over the next two years.
Disney stock is a forever stock
Disney is what some call a "forever stock." That means you can hold onto it indefinitely and expect it to provide gains. It has its finger in so many pies and plays such an important role in the entertainment industry that opportunities are largely self-generating.
As the holiday season kicks in and Disney provides the gifts and entertainment that make moments special, customers are likely to turn to the company for their needs and make this another great comeback quarter. Does that mean December is the right month to buy? Well, Disney stock had its biggest dip of the year in November after investors deemed the Disney+ subscriber count disappointing, and it hasn't gotten too far off that low. Buying on the dip might be a great opportunity for a forever stock. Then again, between all of Disney's businesses and opportunities, any time may be a great time to buy its stock.
