Walt Disney (DIS +1.98%) might be the top name in entertainment, but that doesn't automatically mean its stock is always in good shape. It's taken a pounding over the past few years as the company goes from one problem to the next, and it's down 44% from its all-time highs.
Are things starting to stabilize? The company reported solid results for the 2025 fiscal second quarter (ended March 29), and its newest film release, the live-action Lilo and Stitch, had a fantastic opening weekend. Is now the time to buy on the rebound?
Image source: Disney.
What's happening at Disney?
Disney is a huge media and entertainment giant with many working pieces. Today, it divides its business into three segments: entertainment, sports, and experiences.
Entertainment covers its content, including streaming, film releases, and network TV. Sports is its sports-related content, and experiences covers parks, as well as other experiences like cruises and resorts. When everything goes well, Disney is an unmatched powerhouse. But with so many moving parts, the whole gets weighed down by any disruption.
Fortunately, in the most recently reported quarter, there was success all around. Total revenue was up 7% year over year, with increases in all three segments. Operating income more than doubled to $3.1 billion, driven by increases in streaming, which had been holding back profits for too long. Streaming subscriptions increased by 2.5 million from the previous quarter, and Disney+ is now firmly profitable and growing.
Even linear networks, the traditional TV channels that are on the decline, managed a small operating profit increase in the quarter, and the weakest segment was sports, which reported a drop in operating income. Disney is still figuring out the sports piece as it transitions from a cable focus to a streaming one, and it recently said that it's offering ESPN as a full, direct-to-consumer offering starting this fall. It was just announced that Disney is acquiring popular sports show Inside the NBA, and it's aiming to keep its go-to status and attract paid viewers to the new venture.
Back to film success
Disney felt some pressure with the Hollywood strikes two years ago, pushing back film production and delaying some releases. It bounced back last year, ending 2024 with the highest-grossing film worldwide, Inside Out 2, as well as the No. 3 spot, Moana 2, and the No. 6 spot, Mufasa: The Lion King.
It's doing incredibly so far in 2025, with exactly half of the top 10 highest-grossing films domestically. The most recent release, Lilo and Stitch, came out on Memorial Day weekend and is already the second-highest-grossing film of the year, with $279 million in domestic box office sales. It shattered records to take in the highest four-day Memorial Day weekend sales ever, and it's already picked up more than $600 million in sales worldwide.
NYSE: DIS
Key Data Points
Like Lilo and Stitch, many of the recent hits and upcoming releases depend on the well-worn Disney model of creating franchises and churning out content based on beloved characters. Every single one of its top 10 releases so far this year is a remake or sequel of sorts.
Disney has another six films set to come out this year, of which only one is a new franchise. The other five include the third installment in the Avatar movies, and the first two Avatar movies hold the No. 1 and No. 3 spots for highest-grossing films ever. Incidentally, the No. 2 spot, Avengers: Endgame, belongs to a Disney franchise, too.
Disney has many films already slated for release in 2026 and further out, including the fourth Avatar film, the next Frozen film, etc. These are almost guaranteed to be huge box office hits, and the creative teams spin these franchises into more content for streaming, as well as for use in products and theme parks.
Should you buy Disney stock?
Disney is in a good place today, with a profitable streaming business, hit films, and an upcoming sports launch. It just announced a new round of layoffs, and although that could contain a warning, the market usually greets layoffs enthusiastically, since a leaner organization typically leads to a stronger bottom line.
I wouldn't put too many eggs into Disney's basket yet, but where it's holding today, Disney looks like it's staged for a comeback, and its stock should reflect that.
