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Photography by David Ryder / Bloomberg
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Walt Disney
stock (ticker: DIS) finally did it. After spending most of its spending in the last four years between $ 100 and $ 120 per share, 11.5 percent of sales on Friday blew things up. Disney ended the day at $ 130.04, its highest level of closing.
Disney's investor day Thursday was one of the driving forces behind the rise, during which it unveiled new content and financial projections for its upcoming streaming service, Disney +. In between movie trailers and TV shows, Disney executives presented their vision for the next chapter of the 96-year-old society.
Disney +, due to be launched in the United States on November 12, will cost $ 6.99 per month, or $ 69.99 a year, or about half the cost of
Netflix
(NFLX). An international deployment will follow. The offer will include new library content from Disney, starting in 1937. Cinderella to 2003 Pirates of the Caribbean to 2019 Frozen 2. The entire Pixar library will be available, as well as the old and future Star Wars movies and some Marvel Cinematic Universe movies such as Iron Man and Captain Marvel.
The service will not feature much of its $ 81 billion Fox (FOXA) contract, saving over 250 hours of National Geographic content and classics such as The sound of music and The simpsons.
In the first year, Disney announces that it will have about 7,500 television episodes and 500 films on Disney +. He plans to increase this number to 10,000 television episodes and to more than 620 films by the fifth year. But beyond the presentation and presentation of its content, Disney has surprised investors by providing detailed forecasts on subscribers and the costs of its streaming services, which also include ESPN + (its sports content site ) and a majority stake in Hulu (more for adults). content).
Disney expects to count between 60 and 90 million domestic and international subscribers combined with Disney + by the end of its fiscal year 2024, which ends in September, more than most Wall Street analysts. He also revealed the projected costs of the service and explained that he does not expect it to become profitable until 2024. According to Disney, the costs associated with Disney + in its first year will amount to about 4 billion dollars (investment in original content, expenditure of licensed content, depreciation of original content and operating costs).
For ESPN +, Disney predicts that the number of subscribers will increase from two million today to eight to 12 million in five years, and should reach profitability in four years, after operating losses of About $ 650 million this year. Hulu will grow from 25 million paid subscribers today to 40 million to 60 million by 2024. Disney expects Hulu to record a $ 1.5 billion operating loss this year and become profitable in 2023 or 2024.
Investors were clearly impressed by Disney's goals and seemed willing to wait for years of losses. The company added about $ 27 billion of market capitalization on Friday, more than the value of
CBS
(CBS). The attractive price of Disney + and its arsenal of known and appreciated content, associated with a considerable marketing budget, should allow a successful launch in November.
It's also a good year for Disney's core business, with a superimposed 2019 slate (including Frozen 2 and Star Wars Episode IX: The rise of Skywalker) and the opening of a Star Wars themed world in Disney's US parks. If things go as planned, the stock could continue to increase this year.
The long-term outlook is much cloudier. By issuing this type of instruction far into the future, investors can learn about Disney's long-term strategy and goals, but the half-decade goals may just as well become a trigger. The last time Disney made long-term estimates at an investor day, in 2014, it was forecasting a three-year "compound high single digit growth" for the operating profit of its cable network business. . A little more than a year later, he canceled this directive. Shares fell more than 9% the next day.
It's hard to imagine that it was possible, but even after the mega-conference with Fox and the announcement of his plan to overhaul an almost century-old society struggling with age-old pressures, Disney simply managed to to be better.
Write to Nicholas Jasinski at [email protected]
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