Star Wars: The Force Awakens has been the talk of Walt Disney Co (DIS) and its stock price for months now. It was widely anticipated to set new box office records, and boy, it sure did.
The film grossed $517 million worldwide in the opening weekend alone, and has now reached the $1 billion mark in the first 12 days, the fastest movie ever to do so, despite a delayed Chinese launch that won’t come until Jan. 9.
Episode VII averaged ticket sales of nearly $91 million per day over that 12-day period to hit that Star Wars milestone, which in itself is more than three times what Steve Jobs, the 2015 biopic about the late Apple Inc. (AAPL) co-founder, has grossed in total.
Despite these achievements, DIS stock actually sold off on heavy volume after its tremendous opening night, losing about 4%. And while Disney stock is trending higher in early trading today, shares are still a ways away from their pre-Star Wars levels at $113.79.
What’s going on?
Not the Main Driver
I know, I know. Star Wars is just a drop in the bucket for Disney. Sure, it has hauled in a billion bucks in less than two weeks, but DIS stock is driven by far more than Luke and Leia. Analysts expect Disney to haul in around $56 billion in total in fiscal 2016.
But doesn’t Disney still at least deserve some credit for releasing a critically well-received, record-breaking first installment of the newest Star Wars trilogy? The markets should be popping champagne at the fact that the first Star Wars movie in 10 years was an earth-shattering success.
This isn’t just about beating quarterly numbers — Star Wars in all its forms will be a perpetual revenue stream for DIS stock going into the future, and the company is building out parts of two theme parks for fans eager to ride in the Millennium Falcon themselves.
Some credit Disney stock’s lackluster December performance to selling the news, and that may have something to do with it. But DIS stock was mostly hit by a curiously timed downgrade by BTIG’s Rich Greenfield, who cut shares to a “sell” rating, gave them a $90 price target and said ESPN was a chump paying too much for sports rights.
The note, released the day after the Star Wars release, also decries Disney’s licensing deals with Netflix (NFLX), condemning them as not in Disney’s best interests. They could accelerate cord-cutting and dig into the sizable revenue Disney derives from the networks it owns, Greenfield worried.
Bottom Line for DIS Stock
Here’s the thing: It’s not that these aren’t legitimate concerns. Media Networks account for 44% of total DIS revenue, and cable subscriber losses will likely mount in the coming years. But markets have known about that risk for some time now.
While those longer-term concerns are serious, it’s only right that DIS stock regain some of the unjust losses it suffered on the randomly timed BTIG downgrade, at least in the short-term.
Here are some other things to think about with regards to DIS stock in 2016.
As of this writing, John Divine was long AAPL stock. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.
