Slowing Growth Won’t Impact This Entertainment Giant

The pandemic impacted how nearly every company does business. Some fared well thanks to pivoting to faster growth opportunities, even as traditional lines of business struggled.

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  • One such company is The Walt Disney Company (DIS). The company’s theme parks faced unprecedented closures, and its cruise line was halted. But rising streaming subscribers created years of growth in a recurring-revenue stream for the company.

    Now, the company has warned that its streaming subscriber growth will slow. Given that the company hit its 5-year growth in the first 18 months of operations, that should be no surprise. But Disney is now looking to move to the post-pandemic era with more spending on parks and cruises, as well as the addition of new markets.

    Shares sold off on the news, adding to weakness in recent weeks. Now, shares look like a contrarian buy given the market reaction to the news, which seems a little obvious.

    Action to take: Shares trade a little expensively, but the company’s powerful brand and increased spending in theme parks in the post-pandemic era make for a potential buy now. The company suspended its dividend during the pandemic, and will restore it in the future, but that may be time off.

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  • Traders can bet on a short-term rebound with the January $185 calls. Last trading for about $7.00, they offer mid-to-high double-digit returns for investors.

     

    Disclosure: The author of this article has a position in the company mentioned here, and may further trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.