No movie in this genre has ever ended this way.
For those who haven't seen it (or don't plan to), know that Avengers: Infinity War ends with a dramatic cliffhanger.
That bodes well for the movie's second act, due out in 2019. And it was all part of the plan...
Infinity War grossed $1 billion globally in just 11 days. The film holds the record as the fastest ever to achieve that mark. And it's on pace to set even more box-office records.
Infinity War is the 19th movie in the so-called "Marvel Cinematic Universe" (MCU), a series of interconnected superhero movies that share heroes, villains, and settings.
Marvel Entertainment – the company that created the MCU and the owner of the rights to Marvel's comic-book characters – has developed a repeatable formula. The MCU started in 2008 with Iron Man, which grossed an impressive $585 million worldwide. And Black Panther, the third-most recent movie in the MCU, was an absolute blockbuster in early 2018. It grossed more than $1.3 billion worldwide.
Unsurprisingly, the MCU momentum carried over from Black Panther to Infinity War. And the franchise value of the MCU grows with each mega-hit.
Despite Marvel's success at the box office, the stock of its parent company has underperformed in recent years. Sales declines in the company's largest business segment have weighed on the share price.
But now, the stock is too cheap to ignore.
Disney (NYSE: DIS) holds the enviable position of owning three world-class movie studios.
Disney acquired Marvel Entertainment in 2009. It also bought Lucasfilm and the Star Wars franchise in 2012.
Released in mid-December, Star Wars: The Last Jedi was the highest-grossing film in the world last year, with more than $1.3 billion in global box-office revenue.
And let's not forget about Pixar, which Disney purchased in 2006. The animated-movie studio created hits like Toy Story and Finding Nemo.
Disney is a $170 billion film juggernaut. In total, Disney's Studio Entertainment segment accounted for 16% of its total operating profit last year. And the studios are firing on all cylinders in 2018.
However, the real magic at Disney is that the films and the company's "Trophy Asset" theme parks feed on one another's successes.
For example, Disney is currently building the Star Wars: Galaxy's Edge attraction at Disneyland in Anaheim, California. The attractions will add to the movies' immersive experience... And the popularity of the Star Wars movies will drive even more visitors to the park.
Disney's trove of intangible content and intellectual properties complements its physical assets... and vice versa.
The stock market has punished Disney because it owns an 80% stake in sports network ESPN. As a result, Disney shares have gotten cheap.
Here's what we mean...
Enterprise value (EV) is the total firm value including equity market cap and net debt (debt minus cash). And free cash flow (FCF) is the amount of cash left over after all operating expenses and business investments.
Comparing EV with FCF gives us a fantastic valuation metric for a company with outstanding trophy assets that generates huge amounts of FCF. Disney's EV/FCF ratio is around 19. That's below its five-year average of 23... and near its lowest of 17 in the past five years...
Today, the TV pundits, Internet wags, and day-traders all believe something obvious: that cable franchises (like Disney's ESPN) are dying.
We agree: cord-cutting isn't good news for ESPN.
But few investors have asked, "What comes next? What role will Disney play in the new world of distributed, online entertainment?"
We believe as Disney is able to connect directly to consumers (i.e. through streaming services like Netflix), its profit margins will improve dramatically. Today, Disney is only getting $7 a month or so from each ESPN cable subscriber, and even less from Netflix.
But Disney won't renew its contract with Netflix. Starting in 2019, the only way to get Disney's latest entertainment content will be through Disney-owned streaming services like Hulu. And while ESPN will probably be on cable for a long time, Disney's other premium sporting events will most likely only be available on BAMTech, the Major League Baseball streaming network it owns.
A decline in ESPN won't be the end of Disney's dominance. In fact, Disney has been selling content to consumers directly for longer than any other content provider in the world. Remember how Disney used to only release one classic movie per year on DVD, and only sell them in its own Disney stores? Disney has long since proven its premium content can make any kind of distribution system work.
Content is king. And Disney is the Big Kahuna.
Sometimes investing is simple.
Editor's note: Stansberry's Investment Advisory recommended the stock in April 2018. Subscribers who followed that advice are up roughly 14% so far.