When I think of Disney I remember those classic cartoons and musicals that used to fill my head with wonder, that magical place called Disneyland that only a lucky few kids got to experience, and of course the mouse. Not once did I think of Disney under a different light, until of course my interest in finance had arisen. Yet even with this newfound knowledge, Disney remains to this day as inspiring as it was way back then.
In terms of its financial performance, it is relatively easy to state that Disney has been quite profitable over these past five years, with a stock increase of almost 200%, reaching a share price at open, of $109.05 on August 17. Such financial success however, was not achieved without effort, as Disney has constantly been innovating and investing in new areas so as to maintain market dominance and keep the crowds entertained.
To date Disney has become a true entertainment conglomerate, with a number of extremely successful businesses that have proven to be timeless cash cows, such as Star Wars, Marvel, ESPN and ABC however, despite all its success in these areas, its biggest contributor to its success is not its media outlets, nor blockbuster pictures or even its massive parks; on the contrary its actually its merchandise sales, generating a whopping 39% of its total sales in 2015, that really brings in the cash, being only seconded by its media networks and studio entertainment at 34% and 26% respectively.
From branded backpacks, dolls and lunchboxes to Comic books, video games, apps and memorabilia, you literally can’t walk down a main street without seeing at least one of their products. Taking the above into consideration, when a released film performs negatively in the market; as was the case with the recently released 2015 edition of Fantastic four, Disney won’t suffer all that much, despite the film grossing $26.2M at opening night, when it cost $122M to produce.
With a net worth of $179.5Bil in 2015, its’ yet to launch new movies, (namely Deadpool, Frozen 2 and the much anticipated Star Wars the Force Awakens), and its recently announced Star Wars- themed lands; that shall be their largest single themed land expansion ever, Disney is practically untouchable and is expected to generate a huge profit in the coming years, thereby most likely increasing capital gain.
Granted there are a lot of ifs’ and buts as to whether future releases would be a success or an complete flop, however given the diversity in the amount of future releases, Disney is bound to generate an increase in profits one way or another; having placed their proverbial eggs in serval baskets.
This article was issued by Steve Diacono for Calamatta Cuschieri. For more information visit, www.cc.com.mt . The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice.