In September 2021, Comcast's (CMCSA 2.02%) stock price was hovering around $60 per share. At the time, entertainment companies were doing particularly well as countless people found themselves spending more time at home due to the COVID-19 pandemic. Now Comcast is trading at roughly $40 per share -- a drop of 33%.
There are many reasons for the shift in Comcast's price, not least of which are domestic and international macroeconomic pressures. Despite this, there are signs Comcast's could make sense as a long-term investment.
Comcast's box office highlights
Comcast's NBCUniversal has had recent commercial success with The Super Mario Bros. Movie, generating $1.2 billion in global box office receipts, making it the biggest movie of the year so far. NBCUniversal has just also launched Fast X (the latest in The Fast and the Furious franchise), and it is currently sitting at the top of the U.S. box office charts, having earned almost $70 million over its opening weekend.
NBCUniversal has several more movie releases that may do well this year, including Trolls Band Together -- a follow-up to Trolls World Tour, which became a bonafide premium video-on-demand hit when it was released during the early days of the COVID-19 pandemic.
The Hulu stake
Another asset that holds promise for Comcast in the relative near term is its 33% stake in Hulu. Walt Disney owns the rest of the streaming service, and the two entertainment companies have a standing arrangement for the House of Mouse to take full control in January 2024. However, the two have yet to agree on a price.
Comcast and Walt Disney previously agreed that the stake would be sold for no less than $27.5 billion. But recently, Comcast CEO Brian Roberts has suggested the price could be even higher.
Walt Disney CEO Bob Iger has sounded more cautious about the deal, telling CNBC that "everything is on the table." But Iger may not have too much room to negotiate with Comcast, as activist shareholder Nelson Peltz has made clear his belief that Walt Disney should exit the streaming space if it cannot secure full control of Hulu.
Theme park success
Comcast's theme park unit is also producing results: In the first quarter of fiscal 2023, the company's parks generated $658 million in earnings before interest, taxes, depreciation, and amortization (EBITDA) -- a 46% increase year over year.
Comcast has said much of the growth has come from international parks, and noted that its mix of original characters and licensed brands are drawing in visitors. Indeed, there are also reports that the success of The Super Mario Bros. Movie is helping drive attendance numbers at Super Nintendo World, which opened earlier this year at Universal Studios Hollywood.
The long-term bet
While there's no certainty it'll match the levels it was at a couple of years ago, Comcast still holds plenty of promise. The company's partnership with Nintendo is allowing it to trade on the value of Super Mario, which, from video game sales alone, has generated $55 billion over the last four decades. And with properties such as The Fast and the Furious showing no signs of slowing down, Comcast is seemingly in a strong position.
Of course, there are uncertainties ahead -- not least of which is the sale of its Hulu stake. Should Walt Disney ultimately not follow through on the previously agreed-upon price, some Comcast stakeholders may question the C-suite's negotiating ability.
Needless to say, the next few quarters will certainly be worth paying attention to -- particularly as Comcast looks to increase shareholder value. If the company can continue releasing box office hits and delivering strong visitor numbers for its parks, then it may be a worthwhile long-term investment.
