Despite Disney’s stock price going down due to investing in Disney+ alongside the recent Fox merger, there’s a lot to be hopeful for.
In fact, according to Investing.com, the company saw its biggest hit in four years after its recent quarterly report. This is despite the company opening up one of the top, most-anticipated expansions to its theme park, Star Wars: Galaxy’s Edge. According to the publication, shares fell close to 5% this August 7th. That said, they did jump up again a little bit on the 8th, hitting $137.89 at closing.
Combined with this is Avengers: Endgame becoming the most profitable movie of all time, and the sequel to the popular Toy Story franchise, Toy Story 4, releasing as well. However, Dark Phoenix, an X-Men movie acquired by the Fox merger, didn’t perform very well at all. It came in at a loss, despite Disney spending $71 billion on Fox properties.
That said, overall shares are still up 26% in 2019, with big earnings coming in the other quarters of the year.
However, investors are still unsure of the company’s losses despite it being incredibly ambitious in terms of growth. But, it really seems that there’s just all of this money going into expansion, which will turn around for them in the long run. More specifically, the Disney+ streaming platform that launches in November and will bundle ad-supported Hulu, ESPN+ and the traditional Disney+ content for a price matching Netflix’s standard plan at $12.99. The publication reports that this is a 30% drop from every service’s traditional price.
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That’s not to mention that Disney already claimed that 2019 would be a bit of a tough year for them financially as they make all of these big changes. All of the spending on the aforementioned content led to a $553 million loss for Disney in its direct-to-consumer arm. However, quarter 3 might lead this drop even higher, to $900 million, said Christine McCarthy, CFO of the company.
Overall, it seems that investors are preemptively worried about something that will work out for the company in the long run. Transitional years are always full of some loss in revenue, but the investment is almost always worth it, especially in Disney’s case.