Why You Must Accumulate Disney on the PullbackDIS) never recovered from the 2016 sell off as the stock is down about 20% from its 52-week high levels. Opportunistic investors should look at this weakness as a buying opportunity as Disney is a great company that tends to perform stably in the long run.
Thus, I think investors should use the pullback to buy Disney as the company has taken several steps that will benefit long-term investors.
Most recently, Disney inaugurated its new theme park titled “Shanghai Disneyland”, and accounts for the company’s largest investment park in the international market.
Keeping in mind the struggling situation of the company’s other international theme parks; many analysts are worried regarding the revenue that will be generated from this new park. However, this is not the entire case, as the company has made a lot of innovations in the park compared to its other theme parks.
Initially, Disney planned to launch this park in the previous year and the total cost estimate was around $4 billion, but the company delayed its plan to inaugurate the park this year, instead of 2015, and also surged the overall investment required for the part to $5.5 billion.
Shanghai Disneyland accounts for the company’s second largest theme park that is built on more than 4 square kilometres. The company also detailed that the park comprise of six lands including Tomorrowland and Adventure Isle. Although the company has shelled out a lot of money, it should be able to recoup all of it in the long run due to the advancements and hype.
Apart from this, the company’s slowest growing theme park is getting a lot of positive vibes. Epcot announced the launch of two new rides that the company is uniquely introducing for its Florida theme parks.
In recent years, Disney’s foremost rival Comcast has been growing a lot faster than Disney in Central Florida, and it has become very necessary for the company to innovate its theme parks. And the company has started this by introducing new rides at Epcot.
On the other hand, Disney has a diverse revenue stream, which is a big plus for long-term investors. That said, Disney is facing some problems due to the decreasing ad sales, but complementary business lines can offset that faintness. Moreover, the company’s most popular and significant segment, ESPN, is also facing problems, as it is gradually losing its subscribers. But, the company’s movie segment has received a boost this year. This year has been the best year yet, and has helped the company to reap huge profits. Hence, I sell off looks uncalled for and I am confident Disney will test the highs in the coming months, which is why I think investors should accumulate the stock on the pullback.
Published on Jul 6, 2016By Akshansh Gandhi