The Walt Disney Company (NYSE: DIS) shares have fallen to levels last seen in 2020, when the coronavirus pandemic swept across the world and left Disney theme parks without visitors. However, the company’s revenue has already surpassed the crisis levels of 2020. Could the stock reach an all-time high of 200 USD next year?
This article examines The Walt Disney Company and its business model, providing a fundamental analysis of Disney’s latest financial report. It also includes a technical analysis of Walt Disney’s stock, considering its current performance, forming the basis for a DIS stock forecast for December 2024 and throughout 2025.
About The Walt Disney Company
The Walt Disney Company is one of the world’s largest media and entertainment corporations, founded on 16 October 1923 by brothers Walter and Roy Disney. The company is renowned for its live-action films and animated cartoons, including iconic creations such as ‘Snow White and the Seven Dwarfs’. Its portfolio includes Lucasfilm, Marvel Studios, Pixar, and 20th Century Studios. In addition to film production, Disney operates theme parks and resorts worldwide – Disney World and Disneyland – and broadcasts television through ABC, ESPN, and National Geographic. In 2019, the company launched its Disney+ streaming service. Another significant activity area is producing and licensing merchandise related to its popular franchises. Disney went public on the New York Stock Exchange on 12 November 1957, trading under the DIS ticker.
The Walt Disney Company’s main financial flows
Walt Disney’s revenue comes from several major sources, spanning a wide range of entertainment and media operations. Disney’s primary revenue-generating segments are outlined below:
- Media Networks: television channels and cable networks (ABC, Disney Channel, ESPN, FX, National Geographic, and others). Revenue streams include advertising, licence fees, paid subscriptions, and the sale of broadcasting rights
- Subscriptions and International Operations: streaming services (Disney+, ESPN+, and Hulu) and international trade. The main sources of income are subscriptions to streaming platforms and the sale of content and licences in foreign markets
- Parks, Experiences, and Consumer Products: theme parks, resorts, cruises, and hotels. Revenue is generated through ticket sales, holiday packages, souvenirs, licensed toys, and other goods and services
- Studio Entertainment: film production and distribution, home video sales, and music publishing. Revenue comes from cinema distribution, the sale of digital and physical content, and proceeds from music soundtrack and licensing
In its financial reports, Disney categorises all revenue into three key segments:
- Entertainment: film production, TV programming, cinema distribution, content sales and licensing, soundtrack releases, and Broadway productions.
- Sports: operations related to the ESPN brand, including cable and digital sports broadcasts, broadcasting rights for sports events, the ESPN+ streaming platform, advertising, content licensing, and sports analytical programs and events.
- Experiences: theme parks (Disneyland, Disney World, and international parks), cruises (Disney Cruise Line), resorts and hotels, attractions, as well as events and client engagement activities related to the Disney brand (interactive shows and VIP tours).
The Walt Disney Company’s strengths and weaknesses
Walt Disney’s strengths:
- Popular brand and recognition: Disney is one of the most well-known companies in the world
- Unique intellectual property: the Marvel, Pixar, and Star Wars franchises, classic animated characters, and original content
- Diversified business: Disney generates revenue across multiple segments, including media, streaming, merchandise, and films
- Global presence: theme parks, films, and media cater not only to the US but also to international markets
- Business integration: comprehensive integration across its businesses enables the company to leverage its assets as effectively as possible, with films and shows serving as the basis for themed attractions, merchandise, and licensing
Weaknesses of Walt Disney’s business:
- Reliance on flagship Marvel and Star Wars franchises: failures to release content could negatively impact Disney’s revenue
- Dependence on economic conditions: theme parks and resorts, which are significant revenue streams, are highly sensitive to economic conditions, tourism trends, and global events (for example, the COVID-19 pandemic)
- High streaming costs: Disney+ incurs substantial content costs and faces intense competition, which increases the financial burden on the company’s expenditure budget
- Slow adaptation to audience preferences: Disney faces challenges in promptly responding to changing preferences. Its large-scale structure delays decision-making, and frequent criticism of the company’s cultural and social policies poses serious reputational risks
Disney’s key competitors are Amazon.com, Inc. (NASDAQ: AMZN), Apple Inc. (NASDAQ: AAPL), Comcast Corporation (NASDAQ: CMCSA), NBCUniversal, Netflix, Inc. (NASDAQ: NFLX), Paramount Global (NASDAQ: PARA), Sony Pictures, and Warner Bros. Discovery, Inc. (NYSE: WBD). Each company holds a leadership position in specific business areas (for example, Netflix in streaming, Universal Studios in theme parks, and Warner Bros. Discovery in film and television content production). However, the synergies between Disney’s diverse business segments, scale, and powerful brand give it significant advantages over its competitors.
The Walt Disney Company’s Q4 2024 report
On 14 November, Walt Disney Company released its report for Q4 fiscal 2024, which ended on 28 September. Key report data is provided below:
- Revenue: 22.57 billion USD (+6%)
- Net income: 0.95 billion USD (-6%)
- Earnings per share: 1.14 USD (+39%)
- Operating profit: 3.65 billion USD (+23%)
Revenue by segment:
- Entertainment: 10.83 billion USD (+14%)
- Sports: 3.91 billion USD (unchanged)
- Experiences: 8.24 billion USD (+1%)
Segment operating income:
- Entertainment: 1.07 billion USD (+353%)
- Sports: 0.92 billion USD (-5%)
- Experiences: 1.66 billion USD (+6%)
All indicators (except net income) recorded growth. The company’s management attributes the decline in net income to increased spending on content production and marketing, as well as higher costs for developing streaming services (Disney+, Hulu).
The company forecasts continued growth in its key financial indicators in 2025 but anticipates a potential decline in the number of new Disney+ subscribers in Q1 2025 compared to Q4 2024.
Disney plans a 3 billion USD share buyback and dividend distribution in the upcoming year. Dividends will increase by 33% to 0.50 USD per share and be paid in two instalments in January and July 2025.
In 2026, Walt Disney predicts a slower percentage growth rate in the Sports segment, significant single-digit growth in the Experiences segment, and double-digit growth in the Entertainment sector.
Based on the company’s 2025-2026 forecasts, key financial indicators are expected to rise further, which may positively impact dividend payouts and the share buyback program, ultimately leading to an increase in the stock price.
‘Moana 2’, ‘Wicked’, and ‘Gladiator II’ break box office records
The US saw three major premieres during Thanksgiving week in 2024: ‘Moana 2’, ‘Wicked’, and ‘Gladiator II’, each achieving impressive box office results:
- ‘Moana 2’: this animated film grossed 221 million USD during the holiday weekend in the US, taking the lead and setting a new box office record for Thanksgiving week. Global earnings from its release totalled 386 million USD.
- ‘Wicked’: this film earned over 117 million USD in the US during the holiday weekend and 359 million USD worldwide, making it one of the most successful musical premieres of 2024.
- ‘Gladiator II’: Director Ridley Scott returned to his iconic story, with the sequel grossing 44 million USD in the US over the weekend and generating 320 million USD from international markets. ‘Gladiator II’ has become the most commercially successful film in the career of one of its lead actors, Denzel Washington.
These results established the holiday weekend as the most lucrative in US cinema history, with total box office revenues of 422 million USD, surpassing the previous record of 315 million USD set in 2018.
Expert forecasts for The Walt Disney Company’s stock for 2025
- Barchart: five out of 29 analysts rated Walt Disney stock as a ‘Strong Buy’, four as ‘Moderate Buy’, three as ‘Hold’, two as ‘Moderate Sell’, and one as Strong Sell. The price target for stock growth is 140.00 USD, while the target price for selling is 100.00 USD
- MarketBeat: 19 of 24 specialists assigned a ‘Buy’ rating to the shares, while five gave a ‘Hold’ recommendation, with an average price target of 123.83 USD
- TipRanks: 15 out of 20 professionals recommended the stock as a ‘Buy’, while five gave a ‘Hold’ rating, with an average price target of 124.29 USD
- Stock Analysis: 13 out of 24 experts rated the stock as a ‘Strong Buy’, six as ‘Buy’, and five as ‘Hold’, with an average price target of 124.13 USD
The Walt Disney Company’s stock price forecast for December 2024
The Walt Disney Company’s Q4 2024 report triggered a surge in its stock price, with quotations reaching the 117 USD resistance level on the daily timeframe. Additionally, the chart shows that an ascending channel is forming, with the upper boundary at 130 USD. Based on Disney’s current performance, two potential scenarios arise.
The optimistic forecast for The Walt Disney Company stock suggests a breakout above the 117 USD resistance level, followed by growth to the channel’s upper boundary at 130 USD. This scenario is prioritised as the company forecasts further growth in its financial performance. The pre-New Year rally is expected to push the prices higher.
The negative forecast for The Walt Disney Company stock implies a rebound from the 117 USD resistance level, after which the price could drop, closing the gap formed following the release of the quarterly earnings report. In this case, the stock price might fall to 103 USD.
The Walt Disney Company’s stock analysis and forecast for December 2024
The Walt Disney Company’s stock price forecast for 2025
Walt Disney’s stock has been trading between 83 and 117 USD on the monthly timeframe since April 2022. Whenever the price falls below 83 USD, demand for the stock rises, and the price retraces to the range. A comparable situation occurs when it exceeds the 117 USD level – demand for the stock declines, and the price returns to the previous channel.
The release of the Q4 2024 report triggered a sharp rise in the stock, pushing the price up from 102 USD to the 117 USD resistance level, where it currently remains. A similar situation occurred in February 2024, following the release of the Q1 2024 data. At that time, the price briefly broke above the 117 USD resistance level but failed to sustain above it, resulting in a decline in the stock to 83 USD.
This time, management has promised to increase dividend payouts and allocate 3 billion USD for a share buyback. These actions could help the stock overcome the 117 USD resistance level and continue its upward trajectory. Based on Walt Disney’s stock performance and the company’s forecasts, two future scenarios are possible.
The optimistic Disney stock forecast suggests a breakout above the 117 USD resistance level, followed by growth towards the key resistance at 167 USD, with an interim target at the 140 USD resistance level in line with expert forecasts.
The negative Disney stock forecast points to a rebound from the 117 USD resistance level, followed by another drop to the 83 USD support level. However, given the company’s statements predicting growth in key financial indicators in 2025, demand for the stock will likely revive around 83 USD, potentially pushing the shares higher again.
The Walt Disney Company’s stock analysis and forecast for 2025
Risks of investing in The Walt Disney Company’s stock
Investing in Walt Disney’s shares may be attractive due to the strength of its brand and its diversified business model. However, there are certain risks that investors should consider:
- Dependence on consumer spending: Disney highly depends on revenues from entertainment-related sectors (theme parks, films, and streaming services). During economic downturns, consumers typically cut back on non-essential spending, such as entertainment, which negatively affects the company’s income
- Competition in media and streaming: the streaming market is highly saturated and diverse. While Disney+ has growth potential, retaining its current position requires substantial investments in content, which drives up costs. Since the company cannot focus solely on one type of business (unlike Netflix, where streaming is the primary source of revenue), there is a risk that its influence in this market could diminish
- Development costs and debt obligations: Disney invests in new projects, such as theme parks, streaming content, and technology. These investments increase the company’s debt burden. If interest rates rise in the US, refinancing debt would be more expensive, increasing the cost of servicing the debt and negatively impacting Disney’s overall profitability
- Brand and reputation risks: scandals involving the company’s management or products can damage its reputation. Decisions related to the release of films and series perceived as controversial could lead to rejection or even boycotts from certain audience segments
Disney’s shares can offer holders attractive long-term prospects, especially if the streaming business succeeds. However, investors must consider the abovementioned risks and diversify their portfolios accordingly.
Summary
The Walt Disney Company has resumed paying dividends and plans to increase them. It has also launched a share buyback program, with continued revenue and profit growth projected for 2025 and 2026. These factors support the stock’s long-term growth potential.
In the short term, the pre-New Year rally and expectations of a December reduction in the Fed’s interest rate could enhance the attractiveness of Walt Disney shares.
A negative factor in this scenario would be an unexpectedly sharp shift in the Fed’s monetary policy, with an increase in the interest rate raising the cost of debt servicing. Walt Disney’s long-term debt is 39 billion USD, with 6 billion USD in available cash. A rate hike could also negatively affect consumer sentiment, which is key to the company’s business. If a widespread reduction in consumer spending occurs, this could significantly reduce the company’s profits.
In conclusion, The Walt Disney Company’s shares have strong potential for continued growth, but the associated risks should not be overlooked.
Source: Roboforex
