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Sydnee Gatewood
Sydnee Gatewood
Articles (2594) 

Daniel Loeb Comments on Walt Disney

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August 06, 2020 | About:
Disney

During Q2, we initiated a long position in The Walt Disney Company (NYSE:DIS) when shares traded down on fears that closures of theme parks and movie theaters due to the coronavirus pandemic would cripple the company. A slew of sell‐side analysts had recently downgraded the stock but we believed they failed to grasp that the pandemic also provided Disney with an important opportunity – to accelerate a plan to bring its blockbuster content directly to the consumer via streaming, which will further elevate Disney’s position as the world’s pre‐ eminent media company. Streaming is Disney’s biggest market opportunity ever with potentially $500 billion of revenue spread across over a growing market of 750 million current broadband homes globally ex‐China, dwarfing the size of Disney’s current addressable markets (roughly $100 billion between global box offices and theme parks). Disney's dominant position in the global media landscape sets up the company to take a meaningful chunk of the growing DTC streaming market, shown by the early success of Disney+. In less than nine months, Disney+ attained 60 million global subscribers, a milestone that took Netflix over seven years to meet.

On August 4th, Bob Chapek addressed the market after his first full quarter as Disney’s CEO. We were pleased that he views DTC as Disney’s “top priority” and believe his decision to premiere a tentpole film like Mulan through Disney+ is a defining moment. We encourage Disney to continue leveraging its new digital platforms to further connect fans with their iconic content and brands and, as Mr. Chapek said, “take full advantage of the opportunity” available to Disney today.

From Daniel Loeb (Trades, Portfolio)'s Third Point second-quarter 2020 investor letter.

About the author:

Sydnee Gatewood
I am the editorial director at GuruFocus. I have a BA in journalism and a MA in mass communications from Texas Tech University. I have lived in Texas most of my life, but also have roots in New Mexico and Colorado. Follow me on Twitter! @gurusydneerg

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