Grab your Mickey ears and hold onto your magic wands—The Walt Disney Company (NYSE:DIS) has just released its second quarter 2024 investor letter, and it’s a whirlwind of enchantment and a sprinkle of business reality.
In a letter from Mar Vista Investment Partners, the spotlight was on Disney’s earnings, which—despite beating expectations—caused quite a stir among investors. The company’s stock experienced a slight decline after closing at $91.78 per share, which leaves the enchanting kingdom of Disney with a market capitalization of $166.451 billion. Though not the fairy tale ending one might expect, there’s more magic behind the scenes.
Despite the stock dip, Disney+ and Hulu reached new heights by posting their first quarterly profit. This is truly a milestone moment, considering Disney’s ambitious foray into the streaming world. However, theme park attendance is still playing catch-up to pre-pandemic numbers, slowing the momentum that had been soaring like a ride on Space Mountain. Theme parks and experiences, which are key moneymakers representing 60% of Disney’s earnings, are thus pulling down the overall performance a bit.
However, the story doesn’t end there. There’s still optimism in the air. Disney’s stock is trading at a noteworthy discount to its fair value, offering a potential opportunity for savvy investors. Mar Vista believes the gap between Disney’s current market price and its intrinsic value will close, especially as the streaming division continues to grow and boost profitability.
Moreover, Disney remains a popular bet among top hedge funds, holding its position as a beloved stock for 92 portfolios in the second quarter of the year. Despite some pixie dust setbacks, the long-term narrative is one of growth and resilience.
Ready to discuss? Share your thoughts in the comments and let’s keep the conversation going! Remember, there is much more in store as Disney continues to evolve in the entertainment kingdom.
Source: Soumya Eswaran
