Walt Disney (DIS +1.40%) is a household name, with famous characters, storylines, and franchises supporting the popularity of the business. However, the stock hasn't always panned out. In the past five years, owning the shares would've resulted in investors losing 25% of their starting capital (as of Nov. 20). That's definitely not an encouraging trend.
Disney stock currently trades 49% off its peak. And there are reasons for investors to get interested. But before buying shares, here's what investors need to know.
Image source: Walt Disney.
Streaming is Disney's present and future
Given the monster success of Netflix, it became obvious that the media industry was shifting to a direct-to-consumer (DTC) model. Disney was late to the party, but it now counts 131.6 million Disney+ subscribers, making it a major player in the streaming market. The DTC segment, which excludes ESPN, generated $1.3 billion in operating income in fiscal 2025.
The dying cable networks will continue to be a headwind, as viewership moves away from this medium. But their financial results will steadily become less significant to the overall picture going forward. Revenue here dipped 12% year over year in fiscal 2025.
Owning valuable intellectual property creates a wide moat
Competition is incredibly fierce. Businesses in the industry are all trying to capture viewer attention. However, Disney is able to stand out because of its valuable intellectual property (IP), which makes up its economic moat. The company owns Marvel, LucasFilm, and Pixar. And it has ESPN, the leader in sports programming.
Disney is in a unique position to monetize its IP in a number of different ways, and it has proven that it can draw on its top-notch creative efforts to keep fans engaged.
NYSE: DIS
Key Data Points
Don't overlook Disney's experiences segment
A lot of attention continues to go to Disney's shifting business model, particularly the transition to streaming from cable TV. But investors can't forget about the company's Experiences segment. This continues to be the most lucrative division. It contains the theme parks, cruise ships, and consumer products.
Revenue and operating income were up 6% and 13%, respectively, in the fourth quarter, and it posted a stellar operating margin of 21% during Q4. Two years ago, management announced a plan to invest $60 billion in the segment, clearly indicating a huge opportunity for expansion and to target more Disney fans across the globe.
Disney's experiences segment has historically benefited from pricing power. It goes back to the unmatched IP, which resonates so strongly with people of all ages. The business is able to make emotional connections with consumers, allowing it to charge higher prices across the board, like for streaming services and theme park tickets, over time.
