Pic by Marc Levin, CC-BY 2.0
Disney shares have lost some of their magic recently
It’s been a bumper few months for Disney recently, as the studio has released some hugely-successful films. No less than four of their recent releases have passed the billion-dollar mark, and a fifth is almost there. Yet, following the publication of their last quarter financial results, the company’s shares slid by 5%, wiping billions off the company’s value and sending a shudder down the spines of shareholders. So, how come their huge box office success hasn’t made it to the bottom line?
According to Box Office Mojo, Aladdin ($1.035bn), Spider-Man: Far From Home ($1.097bn) and The Lion King ($1.33bn) have all passed the billion-dollar mark, with Toy Story 4 being just shy at $990m at the time of writing. Plus, of course, Disney now has the biggest box office movie of all time in Avengers: Endgame, which has now racked up $2.79bn and counting. Together, they helped push up Disney’s takings by 33% to $20.2bn for the quarter. Unfortunately, that is just half of the story.
Of course, alongside what comes in, you also have to consider what goes out, and Disney has been on something of a spending spree of late. In their push for world domination, Disney has been buying up the opposition; they most recently acquired 21st century Fox, which set them back a cool $71bn. And what they can’t buy, they are facing head-on. The new Disney + streaming service is coming very soon, which is set to rival Netflix and the rest of the streaming market and feature exclusive Disney properties, Marvel movies and spin-offs. However, until this venture starts to make money, this is pure cost, resulting in that part of the Disney empire recording an operating loss of half a billion dollars.
Profits down by half
Take these costs from Disney’s huge revenue and you find profits are down by an eye-watering 51% over the last quarter—though you shouldn’t shed too many tears, as they still made $1.4bn in just three months. Investors shouldn’t be too concerned about the drop. A full house is always a winner, whether you are marking a bingo card or packing a cinema screen, and Disney’s recent acquisitions mean that it now has the franchises to tick all the boxes and fill all the seats.
It may be a waiting game, but good things come to those who wait. With Disney now owning Pixar, Marvel, Star Wars and the whole of the 21st Century Fox stable, the possibilities are endless. And with an inevitably-popular streaming service to come, things can only get better.
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