Shares of The Walt Disney Company (DIS) were down in Friday trading to the tune of about $2.4 billion, but will likely surpass the near-high they hit Thursday thanks to release of “Star Wars: The Force Awakens” teaser trailer, CityIndex analyst Joshua Raymond told TheWrap.
Most of that was found money from Thursday’s stock increase, as DIS closed at $108.10 apiece yesterday, skyrocketing the overall value of the massive media company, which has 1.7 billion shares outstanding. The stock reached 20 cents higher 25 minutes before Thursday’s final bell, which was just 13 cents less than the company’s all-time best. And that high-water mark came less than a month ago, on March 20.
Raymond credited some of the jump to “an emotional connection” investors felt from the trailer, which is evidenced by the sheer number of views its already garnered in 24 hours. (On YouTube, the official second teaser currently has more than 21.5 million views.)
At market close Friday, however, DIS was trading at $106.69 per share, down $1.41 apiece or 1.30 percent.
Either way and either day, it’s certainly not just Han Solo and the gang’s return creating market confidence — Disney’s earnings are coming out next month, which “are expected to be fairly strong,” Raymond said, even weighing in Wall Street’s high expectations. Plus, current market conditions seem favorable for entertainment companies, if Netflix’s enthusiastic stock performance yesterday is any indication.
“Star Wars” coupled with the company’s other massive movie franchise, “The Avengers,” makes it a good time to be a Disney shareholder. Those two films alone have analysts salivating over the next six to 12 months, when Disney’s film slate is “looking incredibly strong,” in Raymond’s words.
While the stock is down today as people understandably cash out and/or earned excitement dwindles, Raymond says shareholders shouldn’t be worried; after all, DIS is still trading comfortably above $100 per share, and the stock market is a long-term game, something veteran Disney shareholders already know. Raymond classifies the last few years for DIS as “Apple-type movement” — high praise.
And that stable, upward mobility may continue, if the huge batch of new “Star Wars” films have anything to say about it.
“I personally think ‘Star Wars’ will be the biggest grossing film in history,” Raymond said of the coming Christmas release.
If that turns out to be true at the box office, a hit sequel is pretty much guaranteed, regardless of quality, Raymond pointed out. That said, no one seems to be concerned about lackluster content here; however, there was not always a lack of concern when talking about Disney’s big acquisition of LucasFilm.
TheWrap took a financial walk down Wall Street’s memory lane with Raymond.
When Disney purchased LucasFilm in fall 2012 for $4 billion, some eyebrows were raised — and its announcement to develop and market seven additional “Star Wars” movies were met with mixed reviews, he remembered.
Since buying the George Lucas company, however, Disney’s shares price has rocketed up 132 percent, boosting its market cap by $108 billion — or 27 times that of the amount it paid for LucasFilm a scant two-and-a-half years ago. So, it was a pretty good investment. As is DIS today, per Raymond’s charts.
Raymond still lists Disney as a “buy,” even beyond the highs it hit yesterday. CityIndex does not publish targets, however.
Craig Nathanson at MoffettNathanson agrees with it being worth a purchase, he told TheWrap. Meanwhile, Rich Greenfield at BTIG downgraded the stock to “neutral” last month, and he has no change currently.