Why you should buy Disney stock right now
Ever heard of Disney? Of course you have. The name is everywhere; movies, shows, amusement parks. Disney is a media giant, producing some of the most famous entertainment the world has ever seen; and at the moment, Disney (NYSE: DIS) shares appear to be trading at a 27% discount to the overall market.
The stock has been tanking since April, and in September, CEO Bob Iger revealed that Disney would fall short of 2017 full-year estimates, dropping shares more than 4%. DIS stock has gone nowhere in the past 2 years, while the S&P 500 has spiked 33% higher.
So why buy DIS Right Now?
Disney stock is almost certainly too big to keep tanking. Buy it before they get their distribution services up and running in 2018.
The New Digital Era is here (in case you missed it). Disney TV viewers are dying down, and people aren't buying DVDs and cable packages. Disney owns channels such as Disney Channel and ESPN. Traditional media isn't cutting it; streaming services such as Netflix is where the money is.
Here's the problem; Disney doesn't stream content. They recently cancelled their Netflix (NASDAQ: NLFX) contract, and Disney movies can only be rented or bought on online movie services. TV accounted for 43% of the company's profits last year, and of course, cable cutting is occurring fast, with ESPN losing subscriptions drastically.
In response, Disney is becoming independent. They're breaking off from Netflix and are starting a new, over-the-top streaming service. It's a little late to jump in the game against Netflix, but let's be honest, Disney has some of the most famous and valuable content in the world, including rights to franchises such as Star Wars. It is expected ESPN OTT Service will start in early 2018 and Disney OTT Service in late 2019, and there's a huge demand.
More than distribution
Let's not forget about the amusement parks. In 2016, Disney opened their very successful Shanghai location, and continue to expand and keep high attendance rates around the world.
In fact, Disneyland in California is the most Instagrammed location in the entire World. As best put by Kathy Raynes's 'What is it about the Mouse?' article, "The cost [for Disney amusement parks] has gone up enough that even I hesitate to pay it. And yet the crowds go up too. That tells you a lot about our world, the world we need to escape from sometimes."
With continued success among amusement parks, a transition into OTT content distribution, and one of the world's most famous names. DIS might just be the right stock to buy now at a discount, for a long-term investment return in about 2021.
Disclaimer: As of writing this, the author owns no positions in any stocks mentioned. This article expresses opinion; the author is not responsible for any losses; consult with an expert before buying shares in any stock.