Investors have been eagerly awaiting the Disney Stock Price Today, following a rough year for the iconic entertainment giant in 2022. At the start of the year, shares had slid roughly 45%, but now, the stock is back on the rise. Currently, the Disney Stock Price Today is 88.97 USD, touch the lowest point this year. This newfound enthusiasm for Disney is due in part to the company’s continued success in streaming services, as well as its plans for the long-term future. From the launch of its Disney+ streaming service to its plans for new theme parks and resorts, Disney is showing investors that it is still the king of the entertainment world. With a strong financial position and exciting plans for the future, it’s no surprise that investors are eager to get their hands on Disney stock. So if you’re looking for a great investment opportunity, Disney is one to keep an eye on.
Could there be a possibility to benefit from the Walt Disney Company’s (NYSE:DIS) being priced 39% lower than it should be?
It is important to keep in mind that there are a variety of approaches to appraising the worth of a company, and the discounted cash flow model is only one of them. Anyone who would like to develop a better understanding of intrinsic value should look into the analysis model provided by Simply Wall St.
Today, we are going to demonstrate a method to calculate the actual value of The Walt Disney Company (NYSE:DIS) by using the expected cash flows and bringing them down to the present value. We will be applying the Discounted Cash Flow (DCF) model for this analysis. Surprisingly, it is not complicated to understand, which will be evident from our example!
It is important to be aware that there are various methods of calculating a company’s worth, and the Discounted Cash Flow (DCF) model is just one of them. Those who would like to gain a deeper understanding of intrinsic value should look into the analysis model offered by Simply Wall St.
What is the current assessment of Walt Disney’s worth?
To conduct our DCF analysis, we will employ a two-phase approach. The initial phase is typically a period of rapid growth that eventually tapers off, followed by a period of ‘steady growth’. To start, we must obtain our predictions for the next decade’s cash flows. Wherever possible, these will be based on analyst estimates. However, if such estimates are unavailable, we will extrapolate the most recent free cash flow (FCF) from the prior assessment or stated value. We assume that businesses with shrinking free cash flow will decrease their rate of decline, and those with increasing FCF will experience slowed growth over the same period. This is because growth tends to decelerate more in the early years than in the later years.
It is usually taken for granted that a single dollar in the current moment is worth more than a dollar at a future date, so we must diminish the amount of these prospective payments to obtain a current value estimation.
An estimation of cash flow over a period of ten years
During the years 2023 to 2032, the estimated levered free cash flow (FCF) in millions of USD is expected to be US$5.37 billion, US$8.16 billion, US$10.4 billion, US$14.2 billion, US$16.1 billion, US$17.5 billion, US$18.7 billion, US$19.7 billion, US$20.5 billion, and US$21.2 billion, respectively. The source of the growth rate estimates are nine analysts, five analysts, two analysts, and one analyst, respectively. The present value, discounted at 8.1%, in millions of USD is expected to be US$5.0 thousand, US$7.0 thousand, US$8.2 thousand, US$10.4 thousand, US$10.9 thousand, US$11.0 thousand, US$10.9 thousand, US$10.6 thousand, US$10.2 thousand, and US$9.8 thousand, respectively.
Simply Wall St has calculated an estimated growth rate of FCF (Free Cash Flow).
PS. The Simply Wall St application performs a discounted cash flow evaluation for every single stock listed on the New York Stock Exchange on a daily basis. If you would like to figure out the calculation for different stocks, simply look up the information.
We will reward you with a payment of one hour’s worth for your assistance in creating improved investment resources for individual investors such as yourself.
Those who are willing to wait it out may find that investing in Walt Disney securities can be highly rewarding.
Consequently, the company focused on building its digital entertainment and streaming content, also referred to as its direct-to-consumer (DTC) segment, while increasing its subscriber base significantly due to Disney+. Moreover, it introduced its advertisement-supported tier on December 8, 2022.
In 2023, the Walt Disney Company (NYSE:DIS) will be under the direction of a familiar face. Bob Iger is coming back to the role of Chief Executive Officer, following his 15-year stint in the position until 2020. His replacement, Bob Chapek, had the misfortune of the global pandemic beginning just a month into his new position.
The effects of the lockdowns were felt swiftly by the company, as it had to close its parks and cruises, as well as its movie theater distribution channel and production slate which were affected by the COVID-19 regulations on social distancing.
Therefore, the company focused on improving its online entertainment and streaming content, referred to as its direct-to-consumer (DTC) section, while it rapidly increased its membership numbers, with Disney+ in the lead. Additionally, it opened its ad-supported tier on December 8, 2022.
The battle for viewers between various streaming service providers.
The stock market had granted an additional 40% in value to Disney’s shares due to the intensifying competition between Netflix, Amazon, Warner Bros Discovery, Comcast, and Paramount Global. It was able to exceed its expectations of reaching 100 million users earlier than predicted, and its Direct-to-Consumer segment, which includes ESPN and Hulu, kept expanding.
The introduction of the Marvel Cinematic Universe (MCU) Phase 3 and 4 and the growth of the Star Wars franchise with additional programming have caused a rapid increase in the popularity of Disney+. It was also beneficial that Verizon Communications (NYSE:VZ) clients were offered complimentary trials of Disney+.
At its peak, the Company saw its shares reach $203.02, while the reopening of the market on March 11, 2021, seemed to make things better. Nevertheless, the stock began to decline, even though new subscriptions kept increasing. During its financial report for the fourth quarter of 2022, it was revealed that Disney+ had registered a 39% YoY growth to 164.2 million subscribers, HULU had seen an 8% growth to 47.2 million, and ESPN+ had grown 42% to 24.3 million. All in all, the total DTC segment of the Company now has over 230 million users globally.
Parks are providing a helping hand in times of need.
The Parks and Experiences sector has been the main contributor to the Company’s earnings as there was a surge in demand when it reopened. It managed to make a profit of $1.5 billion to make up for the $1.5 billion deficit from the Direct-to-Consumer segment. Nonetheless, numerous grievances have been raised regarding the highly inflated ticket prices due to the inflationary situation and the strength of the U.S. dollar.
Disney stocks have dropped back to what they were before the COVID-19 outbreak and the advent of Disney+. This may provide openings for investors who are willing to wait for a major drop in share prices.
An Execution That Was Open To All To See
In a Steve Jobs-esque manner, Bob Iger has come back to the role of CEO for a two-year period to effect a restructuring of the company in order to bring it and its stocks back to a profitable situation. During the span of his original term, the stock of Disney (NASDAQ:DIS) multiplied fourfold.
It is bewildering why Bob Chapek was unexpectedly and abruptly replaced as CEO over a weekend and mere months after his contract was renewed for an additional three years. It is possible that some clandestine politics may have been the cause of this sudden and embarrassing change in leadership.
What Was the Reason Behind Chapek’s Dismissal?
A major worry was that the DTC segment had been making continual operating losses and had failed to meet analyst expectations for three of the preceding five quarters. In fiscal Q4 2022, the operating deficits of its DTC sector increased to $1.5 billion on a year-over-year basis. Moreover, his politically charged language and PR calamity of embracing a ‘woke’ stance created a rift between the board members, stockholders, and customers.
He got into a dispute with FL. Governor Rick DeSantis concerning the Parental Rights in Education Act, which led to the Reedy Creek Improvement Act of 1967 being scrapped, thus depriving it of its autonomy. It has been rumored that they have employed deceptive accounting methods to mask the real losses from their streaming services, although nothing is public yet.
What lies ahead?
Prior to his departure from Disney in 2020, Iger was the one who got Disney+ off the ground. He was also responsible for taking on Pixar, Marvel, Fox, and Lucasfilm during his time there. As Wall Street has changed its focus from growth to profitability, Iger has made it a point to make Disney+ a lucrative venture.
In order to improve profitability, Iger will modify the cost structure to prioritize operating profits rather than expansion. He has not lifted the hiring suspension as part of his plan to restructure the Company. With his background of completing takeovers, it could be anticipated that Iger might make additional acquisitions or possibly even sell the firm. Disney created four of the six motion pictures that have earned over one billion dollars at the global box office, with Avatar: The Way of the Water being the most recent to make the mark in a period of two weeks.
A weekly pattern of an upside-down cup and handle formation.
The DIS stock dropped to its COVID-19 all-time low after reaching its highest point, $202.02, in March 2021. On July 11, 2022, the stock rose from $90.23 to $125.48 in the vicinity of the 0.382 Fibonacci level when Bob Iger’s return was announced, forming a “bounce” off the low. Subsequently, the shares dropped again to test the bottom of the bounce and broke through, sinking to $84.69.
The 20-period exponential moving average (EMA) resistance is currently decreasing to $112.17 and is followed by the 50-period MA at $98.38. The weekly stochastic lost its upward momentum and is moving back to the 20-band. If stocks are unable to bounce up from the declining 20-period EMA, the inversion of the cup and handle pattern could push them down below the lowest point during the pandemic. The support levels for pullback are placed at $84.69, the pandemic lows of $79.07, $69.85, $60.52, and $46.96.
