Walt Disney World Stockholders

By Steven Cotroneo  
Money & Investing Writer

Shareholders of the Walt Disney Co. (NYSE: DIS) received an unexpected and unwanted shot of -12 percent to their position on Aug. 4, 2015 when Robert Iger, Chairman and CEO commented on the company’s recent performance.

While the company beat analyst estimates on EPS (Earnings per Share) reporting $1.45 per share vs the Street’s EPS consensus of $1.39, Disney fell short on analyst’s revenue estimates, although showing a 5 percent growth year-over-year.
Iger stated that ESPN, one of Disney’s major assets, had “experienced modest subscriber loss,” which sent the stock off its highs of $121.69 per share, down to $108.55 per share.

While Bob Iger assured the shareholders that ESPN was better suited to take advantage of delivering alternative types of programming to viewers, he also accepted the fact that cable television may become less popular in the short term.

On August 24, Wall Street’s “flash crash” sent the stock plummeting down to a share price of $95.36 per share.

Until this point, Walt Disney Co. had been one of the greatest growth performers in the Dow Jones Industrial Average this year. After shattering box office records with fan favorites like “Frozen” and Marvels, “The Avengers,” many shareholders were experiencing a sense of euphoria as this stock had taken them on a magic carpet ride through every level of resistance, and into a 30 percent gain year-over-year.

While the recent 20 percent drop in share price has since been short lived and the stock has recovered 15 percent in the last two months, investors are anxiously awaiting the much anticipated December catalyst, “Star Wars: The Force Awakens,” to get the stock up to the highest analyst projection price of $148 per share.

With $148 seeming rather extreme to some, Bank of America Merrill Lynch (NYSE: BAC), Morningstar (NASDAQ: MORN), and S&P Capital still maintain their rating of a “buy” on the stock, with Bank of America reiterating a much more conservative 12 month objective target price of $130 per share.

It is without question that the recent bump in Disney’s stock price was due to the much awaited presale of tickets for “Star Wars: The Force Awakens.” On October 19 during Monday Night Football’s halftime break between the Giants and Eagles, millions took to their TV screens to observe the long awaited new 2 minute and 25 second trailer.

Upon conclusion of the trailer, ticket sales opened and the record books were forever shattered. Movie website servers around the internet crashed due to such high demand.

Fandango, the leader in online ticket sales, stated that within the first day, Star Wars had shattered “The Dark Knight Rises” ticket sales record by more than 6 times the previous amount, generating $6.5 Million dollars in the US and Canada alone.
Since the release of the new trailer, DIS has seen an increase of five percent in the last 10 days, as well as an increase in positive sentiment. DIS would still have to increase another 13 percent to reach its target price of $130, however many foresee the stock reaching $130 with little to no problems, given that the market could continue its recent bullish run.

A version of this article appeared in the Tuesday, November 3rd print edition.

Contact Steven at
steven.cotroneo@student.shu.edu

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