Investing

Don't Be a Sucker When It Comes to Disney (DIS) Stock

Austin Smith

Published: November 19, 2024 10:40 am

Key Points

• Under Bob Iger’s comeback, Disney (NYSE: DIS) showed good earnings; nonetheless, the stock is still trailing the S&P 500 and has a lot of work to do.
• Disney gave a three-year financial projection, but considering economic uncertainty this strategy was considered as unrealistic and dangerous.
• Although the streaming segment showed meaningful strength, it is extremely very competitive with competitors like Netflix.
• Also: Are you ahead, or behind on retirement? Take this quiz to see for yourself (sponsored)

Watch the Video

Transcript:

[00:00:00] Doug: Disney for a second. So Disney reports, good earnings. Um, you know, listen, people loved it. It’s the first, you know, really good earnings under I, since Iger has returned, but the stock is still underperforming the s and p this year, which tells me that investors are still skittish. I mean, Disney gave people a three year forecast on their financials, which I think is insane because you’re saying to people, absolutely. It’s like, okay, we just want to tell you all something. And that is, is that we have a crystal ball. We know exactly how the world looks in three years. We know whether there’s another, uh, COD. It’s like, come on, please give me a year like everybody else does, but don’t, don’t play me for a sucker.

[00:00:52] Doug: So, you know, you look at Disney, what did they say? Streaming business is better, streaming business is better. It is still a cut throat business. I understand they’re doing better in it, but there are four or five other big, people are still, they have this thing where they turn their service off for Disney and turn off Flexing.

[00:01:17] Doug: You know, people jump around. You never know when that’s gonna speed up and everybody can

[00:01:23] Lee: Yeah. The burn rate can be high.

[00:01:25] Doug: Yeah, sure. I don’t like the theme parks. I don’t like the look on the theme parks. Uh,

[00:01:31] Lee: but that’s where they made all out of that money.

[00:01:33] Doug: I understand that, but I don’t like the look on the theme parks.

[00:01:36] Doug: ’cause you keep hearing that the cost to take your family there is becoming prohibitively high if you get even a little softness in the economy. Do you know one of the first things people look at is the staycation, you know, take their kids down and, you know, watch, let them watch the garbage trucks, compact stuff that they’ve picked up from around the city, or they take them out to the airport and let them watch, uh, you know, airplanes.

[00:02:04] Doug: Right. Right. So they, you end up, you talk about discretionary spending. A theme park is, is truly discretionary. It’s for somebody who thinks they’ve got enough income to blow what is thousands of dollars when you take a family to one of these. And listen, they talking about, they’re going to hold their hand with legacy media.

[00:02:29] Doug: They’re going to keep those brands. Well, you know why you’re going to keep them because nobody else wants them. Okay. I understand it. We’re keeping these as like, it’s, you know, like as a great set of cards. Stop saying that it’s a horrible, horrible business. And it is one of the weak legs on your stool.

[00:02:49] Doug: So two things about Disney three, number one, why is it still underperforming the market? Okay. Number two, it has a couple of divisions that may look okay right now, but they’re, they’re in parts of the overall entertainment business. That could still get whacked. And by the way, number three, they say they’ll replace iger within the next two years or so.

[00:03:14] Doug: What, I mean, what does that mean really just get yourself as a real CEO. Yeah. Don’t tell us it’s gonna take months or a couple years to do. It’s don’t be like

[00:03:25] Lee: Starbucks,

[00:03:26] Doug: Right? I mean, you know what you should do is bring back a C, bring, get a CEO, a new one. Then fire him in a year and bring Iger back for the third time. It’d be like Howard Schultz over at Starbucks.

[00:03:36] Lee: Well, yeah, I mean, they got to just put Iger on as chairman of the board and stay there and let somebody else run it. And like you said, this quarter that was so outstanding was the first quarter in many that was any good. And to say that you’re going to continue to duplicate that and the stock still doesn’t move dramatically.

[00:03:57] Lee: Granted, we’ve hit kind of a rough spot in the markets because they’re, you know, the election trades, you know, starting to taper off. But we were already well in two years into a bull market. If things do roll over like you suggest. There’s not gonna be discretionary spending to go to places like that.

[00:04:15] Lee: Now they may do okay because their movies have been somewhat better, so maybe people stay home and stream their movies or go to the movie theater. But yeah, they need to be really careful and investors need to be careful as well

[00:04:27] Doug: if, if you’re looking at any of these stocks, whether it’s discovery, warning, any of them, the problem with the studio business, it is a truly hit or miss.

[00:04:37] Lee: Yeah,

[00:04:38] Doug: Disney had some hits and

[00:04:40] Lee: that’s a good one.

[00:04:41] Doug: Next quarter, your films can be busts. You can have, you know, two quarters of busts. You shouldn’t buy these big entertainment companies and own them short term because you think they’re going to have some good, good movies. I’m a seller. I don’t like Disney.

[00:05:00] Doug: It’s rallied. So in other words, This to me, it’s gone up too much. It’s still a crummy company. And if you, if this is a chance for you to sell, if you, if you, you know, some good return, cause they had a decent quarter. Don’t be a sucker the next quarter. Maybe it’s okay, but it also could be bad.

[00:05:23] Lee: Well, again, like you said, a lot of it depends on the economist kind of me staying good.

[00:05:28] Lee: There is a lot of guys on wall street. who doubt the soft landing and they think that a recession will come next year.