The coronavirus is running rampant in Europe, with several European countries reporting record death figures and closing their borders. The S&P 500 (NYSEARCA: VOO), Nasdaq, and Dow are plummeting once more, and trading has been halted once again on Wall Street. Millions of people are now being forced to work remotely, and the Feds have futilely cut rates to avoid an inevitable sell-off.
We don’t need any more negative news right now, so it’s time to look at some silver linings, and Disney (NYSE: DIS) might have just the trick.
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Let it go
Has all of this bad news got you down? Well just ‘let it go’, and tuck into Disney+’s latest offering: ‘Frozen II’.
The hit musical sensation is being added to Disney’s formidable lineup three months early as the House of Mouse seeks to help out those in quarantine. I understand the sentiment, but to me, reminding a house full of quarantined children that ‘Let It Go’ is still a thing just sounds slightly sadistic.
Though the animated sequel grossed more than $1.4 billion worldwide, there will still be plenty who have not seen it or wish to watch it again, and again, and again, and again… In fact, the wonderful music of Elsa, Olaf and Co. might just be the one thing more contagious than COVID19 right now.
Not only that, but the most recent ‘Star Wars’ installment, ‘The Rise of Skywalker’, will also be released for sale either via download or DVD a week early, as Disney looks to make things just a little bit brighter.
Disney’s current predicament
It’s not all musicals and rainbows at ‘the happiest place on earth’ though, with its resort, hotel, stores, and cruise lines all over the world closed due to the coronavirus. It is expected that this will cost the company close to $500 million, mere weeks after its visionary leader, Bob Iger, stepped down as CEO and handed the reins to former Parks boss Bob Chapek.
Despite having the highest-grossing cinema year in 2019 with $12 billion at the box office, and recording record $26 billion in Parks revenue, the stock is still down roughly 20% year on year, and 35% in the past month alone. Even theatres are shutting down, with the likes of Mulan and other projects delayed now.
To add to these woes, having successfully launched its streaming service Disney+ in November, which now has nearly 30 million subscribers, it is expected to have delays in the production of original content to the service. This includes two much-anticipated Marvel series’, ‘The Winter Soldier and The Falcon’, and ‘Wandavision’, while the show that made Baby Yoda a star, ‘The Mandalorian’, is also expected to see delays. The delays come in the midst of the so-called ‘streaming wars’ really heating up, as the likes of Apple (NASDAQ: AAPL), Netflix (NASDAQ: NFLX), and Comcast’s (NASDAQ: CMCSA) ramp up their streaming efforts.
Worst of all, these same delays have also caused a slow-down in the release of Hasbro’s (NASDAQ: HAS) Baby Yoda range of toys.
There’s still an upside
That may have seemed like a lot of bad news when I made promises to the contrary, but this blend of corona-related sell-off panic and Baby Yoda-less fear has put Disney in the unique position of looking severely undervalued.
As it stands, Disney is valued at a little over $170 billion. Compare this to the $142 billion Netflix is worth at the same time, and it seems a bit crazy to compare the two:
One is a multinational megabrand that has been around more than a century, has 100 years of content, decades of awards, blockbusters and oscar winners, a winning theme park segment, cruise liners, massive swathes of real estate, and so much more.
The other is a streaming service.
There should be no comparison here, and that is not a swipe at Netflix by any means, but rather an endorsement of how strong the Disney brand is, and how severely undervalued it is right now. It’s certainly worth considering if one wishes to buy into the current dip.
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold positions in Disney. Read our full disclosure policy here.
Editor at MyWallSt
Jamie is the Content Editor here at MyWallSt. His favorite stock is Apple, which is also the first stock he ever bought. Jamie is not only a big fan of its products, but he believes that the tech giant has a whole lot more to give the world, and hasn't even scraped the surface of its potential.