K and I started watching World War II in color last week. My buoy Tapan recommended it (Go check out his website!).
I am thrilled that people dared to record so many hours of footage! Some of the scenes are surreal. Wars are crazy. I highly recommend it; it's way better than the overly simplified, monotonous chapters in our history book. It's on Netflix. Speaking of Netflix, Disney! A lot of companies got obliterated over the past couple of weeks. One of those companies was Disney. Disney dropped over 15% partly because of the Coronavirus. People tend to avoid going to theme parks when there the world is on the verge of a pandemic. So the market is expecting Disney's revenue to take a huge hit this quarter. Another reason for Disney's abysmal drop is the change in leadership. Bob Iger stepped down as CEO, naming Bob Chapek, the next CEO.
While it is true that Disney will incur some losses because of COVID-19, Disney did about $70 billion in revenue in 2019, and Parks, Experiences, and Products were responsible for 37% ($26 billion). It's a significant part of Disney's revenue stream, but I think the theme park business will be back to full operations once the virus issue is resolved. I don't believe it has any permanent damage to the Disney theme park business or, more importantly, its brand value.
As far as the change in CEO goes, I think Bob Iger did a tremendous job in making Disney what it is today. He was instrumental in buying Lucas Films (read Star Wars), Marvel Entertainment (MCU came into existence after Disney deal), and Pixar, among many other such deals. Disney released their hit streaming service Disney+ under him too. I am excited to read his book, Ride of a Lifetime that came out last year. Although I think the announcement of him stepping down was shocking to a lot of people, I think Disney will do just fine under the new CEO. Disney has survived far worse leadership and adverse economic conditions. I wrote about Disney a few months back when it hit 52-week highs:
Disney(DIS) is an '8-80 company'. An 8-80 company is the one whose products are used by an 8-year kid, an 80-year elder, and everyone in between. It also means that if you bought the stock when you were eight years old, you should hold it until you are 80 years and keep holding it after that too. These companies have a very reliable business model, powerful moat, and little to no competition. Very few companies enter my 8-80 list. Disney is on my 8-80 list because they have a lot of things going for it:
- It has a strong brand moat.
- Multiple, recurring sources of revenues (Think amusement parks, movies, and merchandise)
- Adding Fox assets(including a majority stake in Hulu) is fantastic as they diversify geographically in Europe and Asia.
- Intellectual assets like proprietary rendering engines. Fun fact: Photoshop spun out of ILM, which Disney now owns.
Big D is too powerful to be ignored.
I think most of the above still holds even after considering the now dubbed "Black Swan Event of 2020" COVID-19 and the change in the CEO. I have been adding DIS in the past few weeks and will keep doing so whenever an opportunity like this presents itself.
Disclosure: (If you're still wondering) Long DIS