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Will The Mandalorian on Disney+ be the Next Catalyst for DIS Stock?

Disney is probably one of the most successful entertainment outfits ever, and one of the most influential as well. Every year, Disney movies rake in tons and always makes its presence known at the box office. In 2019 alone, Disney stock (DIS) has hit a 24% year-to-date (YTD) figure.

Stocks everywhere are anything but stable and this has been the same for Disney as well. As good as its YTD figures have been, the month of August has been a little disappointing for investors. DIS currently sits at $131.67, almost like it wasn’t at $147.15 just about a month ago and shareholders are expectedly unhappy about it.

However, about a year ago, Disney CEO Robert A. Iger announced Disney +, stating that it would be launched sometime this year. Now that the November 12 U.S. launch is just around the corner, could Disney+ be the proper catalyst to stoke the DIS fires?

According to Disney’s official fiscal third-quarter report published on Tuesday the 6th of August, the company was able to pull in a $20.25 billion revenue on income per $1.25 share. This was not an encouraging figure especially as projected figures for the entire revenue and also its net profit, did not come to pass. Disney, at the time, offered a reason for the loss:

“Our third-quarter results reflect our efforts to effectively integrate the 21st Century Fox assets to enhance and advance our strategic transformation.”

Earlier this year, Disney made a $71 billion acquisition of Fox Corporation and seemed to declare that this, along with a heavy financial focus on ESPN+, Hulu and Disney+, were the reasons why the Q3 report looked unfavorable.

The report showed specifics in the company’s other segments. Operating losses from the Direct-to-Consumer & International segment which contributed 18% of Disney’s revenue, jumped by $385 million even though the total figure hit $3.86 billion. For Media Networks including ESPN and ABC, the report showed a $6.7 billion revenue (contributing 33%), indicating a year-over-year rise by 21%.

For Studio Entertainment, the segment handling Lucasfilm and Marvel which accounts for about 19% of revenue, the reported figure stood at $3.8 billion, a 33% surge from last year. The segment which handles Disneyland and other related endeavors called Parks, Experiences, and Products, also showed a rise by about 7% from last year, hitting $6.6 billion.

From the aforementioned report, it’s easy to see that running costs for Disney have significantly increased. The company has said that it’s Direct-to-Consumer operating losses could easily jump from Q3’s $553 million to $900 million by the end of Q4. Regardless of this projection, Disney will keep up with investments for Disney+.

When it launches on the 12th of November for U.S. consumers, Disney+ will also offer a joint bundle with ESPN+ and Hulu, pegged at $12. These new additions will definitely cost the company a lot of money and seeing as Disney has projected more losses, it might be a little too premature to speak on the state of DIS for the fourth fiscal quarter.

It may also be noteworthy to mention that Disney pulled in some money from selling its content to Netflix. When it does stop that, there’s no telling how well the DIS would fair.

Disney has officially released the first trailer for its upcoming and highly anticipated Star Wars series titled The Mandalorian. The character, played by Pedro Pascal – popular for his role as Oberyn Martell on HBO’s Game of Thrones – will ensure a “darker, freakier side of Star Wars” according to executive producer Jon Favreau.

This is touted as the first new addition to Disney+ when it is officially released for the U.S. audience. Is The Mandalorian strong enough to revive the DIS? Only time will tell.

Will The Mandalorian on Disney+ be the Next Catalyst for DIS Stock?

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