There are only a handful of original attractions at Walt Disney's (DIS +2.09%) Magic Kingdom still operating at the Florida park that debuted nearly 53 years ago. Visitors lost another one last month, with the closure of the Frontierland Shootin' Arcade. The permanent closure of the Old West-themed shooting gallery only upset a small segment of the gated attraction's fan base. It's also not as if world's largest theme park operator needs the target practice.
Disney has been knocking down bearish arguments with ease lately. Its premium streaming business turned profitable two quarters ahead of time earlier this year. Disney is also kicking off this summer with a pair of record-breaking theatrical releases. The stock may be falling short of the market averages for the fourth year in a row, but headwinds are becoming tailwinds. If you're still bearish on the House of Mouse you may want to revisit your naysayer thesis.
NYSE: DIS
Key Data Points
The multiplex gets a wake-up call
If your local movie theater seemed a bit crowded over the weekend you didn't step into a time warp. Deadpool & Wolverine -- the latest release from Disney's superhero hotbed, Marvel -- raked in $205 million in domestic ticket sales. It's the strongest opening for an R-rated film, ever. It's the biggest debut since 2021's Spider-Man: No Way Home. In another fun fact that speaks to Disney as a perennial hit factory, Disney's studio is now the force behind 16 of the 18 most successful domestic opening weekends.
This isn't the only blockbuster for Disney this summer. Last month's Inside Out 2 also broke a few records. It just topped $1.5 billion worldwide, making it the planet's highest-grossing animated feature. You have to go all the way back to 2022's Avatar: The Way of Water -- another Disney-backed release, of course -- to find a great box office tally. Yes, Inside Out 2 has already topped last year's sensation, Barbie.
Last year was pretty bleak at the multiplex for Disney. It had more high-profile misses than hits. Naysayers argued that Disney had lost its touch, and it was a fair knock. Well, it's two-for-two this summer. Disney's back.
Image source: Getty Images.
More than just movie magic
It's not just the stunning reversal this summer for Disney's iconic studio business. The biggest drag on Disney's financials since the pandemic has been its streaming operations led by Disney+, ESPN+, and Hulu.
Disney set a goal for its direct-to-consumer streaming segment to be profitable by the end of fiscal 2024. It managed to get out of the red in the fiscal second quarter ending in March. Disney did warn that there will be some weakness for the fiscal second quarter that it will report next week, but it expects to return to profitability in the September-ending quarter before building on that in fiscal 2025 and beyond.
The profitable turn for Disney+ is huge, as most premium streaming platforms are struggling. Strength in streaming was supposed to help make up for the viewership losses for its linear media networks including ABC, Disney Channel, and its majority-owned ESPN. With both businesses now profitable there's no fumbling during the transition process for the bellwether media stock.
Theme parks have been a bright spot for Disney. Attendance isn't back to pre-pandemic levels, but revenue and segment operating profits hit new highs on the strength of a surge in per-capita spending. The year-over-year comparisons have been more problematic lately, but Disney stands to benefit from new attractions it has recently opened, as well as a rival theme park opening next year that should send Orlando tourist counts skyward.
Disney still has some work to do, but it's less imperfect than the bears think. It's making the right moves now, and picking up Disney for just 16 times the new fiscal year's projected earnings -- which starts in just two months -- seems historically cheap.
The shooting gallery is gone at the Magic Kingdom's Frontierland. But Disney's no longer firing blanks.
