The unfortunate arrival of the novel coronavirus has produced some losers in the stock market but also some winners. Disney (NYSE:DIS) stock should have been a big loser in theory. But things don’t always work out as expected in the markets, do they?
Sure, the pandemic has kept kids and their parents out of theme parks. That won’t last forever, but it is an issue. And, it’s probably a factor in DIS stock’s price decline.
However, the need for children’s entertainment hasn’t evaporated. It’s just moved indoors, and Disney provides this type of entertainment for kids and their parents too. Sooner or later, the share price should reflect Disney’s willingness to adapt to the “new normal.”
A Perfect Lockdown Package
It’s understandable that children are bored and restless during mandated and voluntary lockdowns. Through the popular Disney+ streaming service, however, parents have been able to keep their kids entertained.
More than any rival streaming service provider, Disney has a worldwide reputation for providing content that’s safe for children. Parents won’t have to worry about having their kids see inappropriate material.
There’s also programming for Mom and Dad through Hulu and ESPN+. In fact, it only costs around $13 per month for both of those plus the Disney+ programs. It’s almost as if Disney created a “lockdown package” with ready-made programming for the entire family.
This might or might not be a deliberate strategy on the part of Disney. Either way, it’s benefiting the company tremendously. By the end of December’s fiscal quarter for Disney, the company had racked up 26.5 million paid Disney+ subscribers.
Racking Up Subscribers
By Feb. 3 that figure grew to 28.6 million. Then that number ballooned to more than 50 million by April 8. Could this subscriber growth be enough to offset the lack of theme-park revenues? Only time will tell, but Disney is off to a great start in the streaming wars.
And just as the pandemic isn’t limited to the United States, Disney’s streaming service isn’t limited to one country. Disney+ has already been available in Canada as well as Australia and New Zealand, and on March 24 the service was expanded to Spain, Switzerland, the U.K., Italy, Germany, Ireland and Austria. Plus, France was added to the list on April 7.
It also helps that Disney+ offers fast 4K streaming along with the ability for subscribers to stream the content to four different devices at the same time. That’s important to Generation Z as every kid seems to have his or her own device nowadays.
The old days of the entire family watching one television set together are long gone. Every child in a household will want his or her own device and they’ll probably all be watching different things. The coronavirus lockdowns haven’t changed that.
We can lament the loss of family “together time” if we want to, but that’s the way it is. Disney is making a savvy move in adapting to changing family dynamics. These are shifts that began even before the lockdowns. Acquiring 50 million subscribers for Disney+ since its U.S. launch is proof positive that the company is still the king of family entertainment.
The Takeaway on DIS Stock
Let’s face it: stay-at-home mandates probably aren’t great for children. However, Disney has stepped up to the plate and delivered kid-friendly content through its popular streaming service. Investors in DIS stock should enjoy robust gains as more families turn to Disney+ for the ultimate lockdown entertainment package.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets. As of this writing, he did not hold a position in any of the aforementioned securities.