NFLX - Bireme Capital - Disney: Experiences Segment Alone Justifies Current EV Get Rest Of Business At Steep Discount

2024-06-22 09:00:00 ET

Summary

• Disney has faced challenges in recent years, including declining operating income and underperformance in its linear networks and streaming services.
• Despite these challenges, Disney's Experiences segment, which includes parks and resorts, continues to show strong growth potential and profitability.
• Disney is focusing on profitability in its streaming services, with plans to bundle its DTC offerings and improve margins, leading to anticipated strong earnings growth in the future.

The following segment was excerpted from this fund letter.

The Walt Disney Company ( DIS )

Over the past decade, we have followed Disney with interest. It is a competitor to numerous stocks we've owned, including 21st Century Fox (which Disney purchased in 2019), Comcast ( CMCSA ) and Netflix ( NFLX ). We've always been impressed with their IP, and therefore were a bit surprised by the company's underperformance over the last few years. Adjusted operating income declined from nearly $16b pre-pandemic to less than $13b in 2023, and the stock dropped by more than 50% from its 2021 peak....

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