Reopening the World Means This Trophy Asset Will Rake In Cash Again
A return to "normal" is on the horizon...
The U.S. government has granted emergency use authorizations ("EUAs") for two COVID-19 vaccines. So far, the U.S. has administered 63.1 million doses, averaging 1.33 million doses per day over the past week, according to data compiled by Bloomberg.
That pace could soon accelerate... Two more vaccines are going through the approval process for an EUA. This would increase the supply of the vaccine and ensure that there is a dose for everyone who wants one.
This vaccination progress is a huge step in reopening the economy. Once enough people are vaccinated and the U.S. builds a certain amount of "herd immunity," many of the coronavirus restrictions can be lifted... and people can once again flock to concerts, restaurants, and theme parks.
National Institute for Allergies and Infectious Diseases Director Dr. Anthony Fauci puts this timeline around the fall of this year.
A full reopening of the economy would mean huge things for today's company. The largest part of its business could return to operations...
Disney (NYSE: DIS) is a titan of the media and entertainment industries.
Its portfolio is full of "Trophy Assets." At Stansberry Research, we consider Trophy Assets to be parts of a business that are impossible for other companies to replicate. They give a company a huge advantage over the competition.
One of Disney's Trophy Assets is its content catalog. Through acquisitions, it now has three world-class movie studios: Pixar, Marvel, and Lucasfilm. These franchises helped Disney create seven of the top 10 highest-grossing films in 2019.
This content also boosted the performance of its Disney+ streaming service throughout 2020. With people stuck at home under lockdown orders, they needed some way to keep themselves entertained. And because Disney pulled its content from competing services, folks signed up for Disney+ to access their favorite Disney films...
Disney+ has grown to 94.9 million subscribers as of January 2. At the company's investor day in December, management said it had 86.6 million Disney+ subscribers. And at the end of the same quarter last year, it had "only" 26.5 million subscribers.
Across all its streaming platforms – which also include Hulu and ESPN+ – DIS said that it had 146.6 million subscribers. That's up from 63.5 million at the end of the same quarter last year.
In April, we showed you that Disney+ had already exceeded its long-term subscriber goal of 60 million to 90 million subscribers by 2024. Now it has a goal of 260 million subscribers by that date. And some on Wall Street are even more bullish...
Analysts at UBS recently said Disney+ could hit 340 million subscribers by 2024. If that were to happen, the service would have nearly four times as many subscribers as originally forecast.
But streaming is only one part of Disney's world-class business. Another one of its Trophy Assets is set to benefit as the world lifts coronavirus restrictions...
Disney's theme parks and resorts business accounted for about 38% of overall sales in 2019, compared with 36% for its media networks, 16% for its movie studios, and 13% for its direct-to-consumer and international sales.
This important segment of Disney's business remains ravaged by COVID-19. In 2020, this segment's revenues have been cut in half. Many Disney parks remain closed, and those that are open are doing so under strict capacity restraints.
But there is hope for these businesses to return to normal in the near future... Countries across the world have begun distributing COVID-19 vaccines. And more vaccine approvals are likely on the way. So life is beginning the slow crawl back to normal. As that happens, Disney's parks will reopen.
And given that they attract visitors from all around the world, there's likely tons of pent-up demand for trips to Disney's resorts. So this business should bounce back quickly. That's what we saw when Disneyland Shanghai reopened in May and tickets were sold out for the first two weeks.
Disney's streaming services – and their incredible portfolio of shows and movies – have buoyed the company throughout the pandemic. And now, with a return to "normal" in sight, another one of its Trophy Assets is coming back online. That should push the share price even higher.
Sometimes investing is simple.