Source: Deadline
On November 10, 2021, the Disney Company reported fourth-quarter fiscal 2021 results by highlighting that the company is regaining its momentum after the pandemic but it needs a little more time to have a full recovery.
In 2021 Disney’s stock was down by double-digit percentages and the operations going under Disney are still operating with COVID-related restrictions. But by the end of 2022, that may not be the case.
Several effective vaccines against COVID-19 have been developed and almost everyone around the world has taken the doses. The government worldwide are also lowering the business restrictions step by step.
One theory was laid that when this business reopened, there would be a quick snap-back as consumers unleashed pent-up demand after being stuck at home. Through this, the company would once again bring a large group of people together in person and will gain benefits in near future.
Disney’s Parks Could Be More Profitable
Undoubtedly, theme parks affected Disney’s business the most when the pandemic hit. In 2020, all the theme parks were closed to visitors which crushed the segment that generated $26 billion in revenue and $6.7 billion in operating income in its accounting year before COVID.
Now theme parks are regaining their momentum slowly and steadily. Last year also we have seen that the revenue was also doubled from $2.73 billion to $5.45 billion. It will take some time for the full recovery though.
Not only adults but kids between the ages of 5 and 11 have also been vaccinated. That’s why Disney’s theme parks are welcoming more visitors across the borders this year. But not in full strength as several countries still have restrictions, making it inconvenient for tourists to travel.
An increased number of visitors will increase the revenue of the company and would create a high-profit margin. Analysis was taken that guest spending was 30% higher in 2021 than in 2019. By all these results, CFO Christine McCarthy is confident that theme parks will be more profitable in the coming future.
Disney’s cruise ships are also started sailing in the sea again and will add up more revenue for the company. A new ship of their named The Wish also came in June of 2022.
Disney’s Streaming Segment Is Taking Center Stage
The coronavirus pandemic has created a demand for in-home entertainment which increased the emphasis on its direct-to-consumer streaming business. Disney+ has been beneficial for this. Even the investors shift their focus to the same.
On October 3, 2021, the service had reached 118 million subscribers which was almost 45 million more than it had been in 2020. Not only this but also the overall revenue was $67.4 billion in 2021 which increased by 3% from 2020.
However, these figures would have been much higher if Disney would not be affected by the coronavirus. They decided to release some of their best films in theatres and by limiting its ability to produce content, Disney would not be able to invest in the development of its streaming segment as much as it wanted to. As result, Disney’s stock price was down 15.7% in 2021.
That, too, will not be the case at the end of 2022. As the management said that they would be doubling the amount of original content from their marquee brands, Disney, Marvel, Pixar, Star Wars, and National Geographic, coming to Disney+ in FY '22.
This powerful combination of the streaming segment with the business would appreciate the stock price of Disney in 2022.
Disney Shareholders Are Looking Forward
Management of Disney is not the only group looking forward to 2022. Disney’s shareholders are also hoping for better results by the end of this year.
During the coronavirus pandemic, Disney’s stock has also been affected badly. It has lost a disappointing 12% so far in 2021. Investors are eager to turn the page and wanted to see if the next chapter of Disney would bring back the magic to the world. Would this year 2022 be beneficial for owning Disney’s stock?
Written by- Vipasha
Edited by - Kritika Sharma
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