Why ‘The Mandalorian’ Changes Everything for Disney Stock

The series adds new color to an established money maker

Usually, blue-chip stocks are known for their steady-as-she-goes approaches, overreacting to neither good news nor bad. Recently, though, entertainment giant Disney (NYSE:DIS) has raised more than a few eyebrows. So far this month, Disney stock is up nearly 13%. And for the year thus far, the DIS stock price has gained a very impressive 39%.

Source: Ivan Marc / Shutterstock.com

But can fresh prospective buyers profit from this trend? Disney stock has benefitted from two key catalysts in November. Earlier this month, the Magic Kingdom produced a strong earnings beat for its fiscal fourth quarter, exceeding per-share profitability expectations as well as consensus revenue targets. Thanks to this overall performance, the DIS stock price responded by jumping more than 5%.

However, the associated Q4 conference call largely focused on the second November catalyst for Disney stock: the company’s long-awaited streaming service.

Prior to the Nov. 12 launch of Disney+, management disclosed serious enthusiasm for the platform. For instance, Disney CEO Bob Iger stated that the streaming service’s demographics “were far broader than a lot of people expected them to be.”

Just the fact that the Magic Kingdom was bringing its invaluable entertainment brands under one roof was enough for many to become believers in Disney stock. However, we’re now getting a taste of how big Disney+ will be for shares.

On its debut, the new streaming service attracted over 10 million subscribers. That’s not surprising considering its $7 a month price tag. Not only that, the company offers a seven-day free trial period.

The question for DIS stock, of course, is how many of those 10 million will stay for any appreciable length of time? Most of them, and here’s why.

‘The Mandalorian’ Is a Game Changer for Disney Stock

As I argued recently about Roku (NASDAQ:ROKU), you need to experience streaming and specifically Disney+ to fully appreciate its significance for DIS stock. Sure, you can look at the stats, which we’ll later discuss. And of course, you can reference the technical momentum, which demonstrates Wall Street’s seal of approval.

But until you get your Disney+ subscription, much of what I have to say next will lose its resonance. Nevertheless, I’ll give it my best shot.

Out of all the reasons to get Disney+, one stood well above the rest: The Mandalorian. A brilliant spinoff from the iconic Star Wars franchise, The Mandalorian follows a fully armored mercenary. Inspired by the popular Boba Fett character, the protagonist oozes mystery, and therefore, a compelling narrative.

Since we never get to see his face, the audience can never confidently decipher emotions through visual cues. Moreover, we only get brief glimpses as to the main character’s past. As each episode flows along its pre-defined trajectory, it creates fresh narrative side channels waiting to be explored.

But the biggest catalyst for Disney stock is The Mandalorian’s tone. Unlike every other Star Wars film and spinoff, The Mandalorian has a palpable weight to it. In some scenes, the ambiance is strikingly dark, perhaps too much so for a Star Wars-based story.

And yet, this is exactly what DIS stock needs. It’s not just about owning the Star Wars franchise. Instead, it goes to Iger’s earlier point about demographics. With The Mandalorian, even older folks and those who are too cool for school can enjoy the gritty nature of a Star Wars universe when the kids have gone to sleep.

In other words, Disney has found a viable and compelling way to reinvigorate Star Wars for generations to come.

Hard Numbers Support the DIS Stock Price

Better yet, the numbers back up my enthusiasm for Disney+ and what it means for Disney stock. According to data compiled by Forbes.com contributor Adrienne Gibbs, viewership stats for The Mandalorian are off the charts. After a week from its debut, demand for the Star Wars spinoff is:

  • 298% ahead of CBS All Access’ Star Trek: Discovery on the seventh day after its season-two debut
  • 175% ahead of HBO’s Westworld on the seventh day after its season-two debut
  • 3% ahead of BBC’s Doctor Who on the seventh day after its series-11 debut
  • 8% ahead of Netflix’s Stranger Things on the seventh day after its season-two debut

Look, we all know that when Star Wars: The Rise of Skywalker hits theaters next month, it will break all kinds of records. Simply put, it’s the most powerful brand in entertainment media.

But The Mandalorian provides a dark realism to the storyline that will draw in the weirdos that don’t like Star Wars. Honestly, you’d be crazy not to at least consider adding Disney stock to your portfolio.

As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2019/11/why-the-mandalorian-changes-everything-for-disney-stock/.

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