Disney (NYSE:DIS) is in the news once again. It is offering a 25% discount for rooms at certain Disney resorts from July 8 through Sept. 30 for Disney Plus subscribers. The announcement has not had a major impact on the DIS stock price, which has remained under pressure since the start of the year.
The pandemic was disruptive for the company. Disneyland is one of the most iconic parks globally, and it’s been a favorite destination for many people for decades now. However, due to Covid-19, Disney’s amusement parks had to shut down, leading to massive losses.
Then, the broader economic environment soured at the start of this year. Inflation fears are leading the Federal Reserve to take aggressive actions, including interest rate hikes, and the Russian invasion of Ukraine has contributed to a massive surge in oil prices. That has driven investors toward safer investments like exchange-traded funds (ETFs) and dividend stocks.
Nevertheless, DIS stock looks like an enticing bet as it invests aggressively in streaming and revenue from resorts and theme parks. Plus, this latest announcement reflects its current focus on the streaming service. Summer is a great time for Disney, as its business ventures are in a prime position for success.
Disney is one of the prime players in the streaming space. Jan. 1 marked a significant milestone for it, as the company announced that it now has 196 million subscribers on its three main streaming services. This number includes 130 million subscribers from its flagship service, Disney Plus.
Netflix (NASDAQ:NFLX) remains the streaming category leader with 222 million subscribers. However, that growth has been slowing in recent quarters. The company reported 8.3 million new members signed up for the service versus an expected 8.5 million in its latest quarter.
In comparison, Disney’s streaming service continues to grow rapidly. The number of subscribers increased significantly with the addition of new shows and domestic subscribers have seen encouraging growth, rising by 10 million in its latest quarter.
Covid safety measures have helped Disney parks reopen, restarting a highly lucrative segment for the company. It made $7.2 billion in revenue in the last quarter, doubling from $3.6 billion. Operating income rose $2.5 billion versus a loss last year. Attendance levels remain off from the pre-pandemic levels. So, there is a lot of growth still in its future.
DIS stock is a buy. The increase in popularity of the company’s steaming space will lead to increased interest from investors looking for companies with strong fundamentals and high growth potential.
Last year, the company’s streaming services generated $16.3 billion in revenue. Although the segment reported an operating loss of $1.7 billion, it is narrowing, meaning profitability is around the corner.
Its other business segments are also producing strong growth, and DIS stock is trading at very affordable price multiples. Therefore, the time to buy is now.
On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
