Disney is re-releasing Avengers: Endgame with deleted scenes on June 28th in a move that should vault the superhero flick to first place in the all-time global box office rankings. Endgame is gunning for the crown currently held by Avatar, which, now that the Fox acquisition has been completed, Disney also owns.

In fact, Disney-owned films now account for 10 of the top 15 global box offices of all-time. The company has achieved a level of box office dominance that is unprecedented in the modern era. This dominance is bad news, not just for its fellow movie studios, but for all other content producers out there, especially Netflix (NFLX).

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Photo Credit: Netflix/Disney/Erik Kain

    5 replies to "Disney’s Avengers Spell Endgame for Netflix"

    • Stanislav Grom

      This article was published on June 26th when the Disney stock was 140$, yet on July 5th, with the stock 142$, the Disney stock got changed to Unattractive rating with a Sell recommendation by your own metrics. How should I reconcile these seemingly conflicting recommendations? Thanks.

    • Sam McBride

      Disney currently has a Suspended Rating in our system due to its acquisition of most of 21st Century Fox. What this means is that due to the impact of the acquisition, the company’s current financials are no longer a reliable indicator of the risk/reward of the stock. In particular, the company’s valuation metrics are distorted due to the fact that it has the additional debt/shares issued in the acquisition, but it has not yet gained any additional profits from the deal. For this reason, investors should not treat our current rating on Disney as definitive.

      This article, on the other hand, does integrate the impact of the Fox acquisition into its analysis of profits and valuation. The company’s track record gives us confidence that this acquisition will create long-term value for shareholders, and as the DCF scenarios at the end of this article show, DIS has significant potential upside still.

    • Stanislav Grom

      Thanks Sam, that helps.

    • Dean D.

      With the earning short fall Disney just released and the bad news of the Star Wars theme park revenue can this analytics described here be run again? I’m really curious to know if the failure of Star Wars under Disney has an impact to the entire stock.

    • Sam McBride

      Calling Star Wars a failure under Disney seems premature. 3 out of the 4 Star Wars movies they’ve put out have grossed over $1 billion worldwide. Galaxy’s Edge has struggled at its launch, but plenty of parks/attractions struggle at their launch before developing into profitable ventures. If Episode 9 flops in December, then we’d start to be more worried, but a couple of missteps does not mean that Star Wars has lost its value.

      Meanwhile, the earnings miss has a lot more to due with analysts struggling to forecast results post-Fox acquisition than with any real problems with the fundamentals of the business. The company faced big expenses from the launch of Disney+, the consolidation of Hulu, integration costs with the Fox acquisition, and poor results from the Fox Studio (mainly due to the flop of Dark Phoenix). On the other hand, the studio segment has already broken its own record for single year box office gross, ESPN operating income has stabilized, and even with the Galaxy’s Edge issue the Parks segment continues to grow at a healthy rate.

      We continue to see a lot of positives with Disney’s stock, and the announcement of the $12.99 bundle of Disney+, ESPN+, and ad-supported Hulu represents a massive threat to Netflix.

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