Daily Brief: Disney Made Magic Happen, But All Eyes Are Fixed On The Fate Of Its Theme Parks

Daily Brief: Disney Made Magic Happen, But All Eyes Are Fixed On The Fate Of Its Theme Parks

over 2 years ago3 mins

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Disney announced stronger-than-expected quarterly earnings late last week, with all seemingly well again in the Magic Kingdom.

What does this mean?

There was a lot for investors to like in Disney’s latest report. Streaming service Disney+ now boasts a higher-than-expected 116 million paying customers – closing the gap on arch-enemy Netflix, which has had a tough couple of quarters.

Disney subs

But while the loss-making Disney+ is a bet on the company’s future, its theme parks, experiences, and products segment speaks more to Toontown’s present. And this didn’t just roar back to life last quarter: it returned to profitability for the first time since the pandemic began. Granted, the majority of the segment’s profit came from people buying merchandise, but beggars can’t be choosers – and with Disneylands getting busier, it probably won’t be long until the parks become profitable again in their own right.

Delta dip

Why should I care?

For markets: What can I say except you’re welcome?

Disney’s share price rose 3% on Friday as investors booked back into the House of Mouse. While the average Disney+ subscriber may be paying a lower price than predicted, the company is still adding them faster than expected – and that should mean more profit in the long term. Theme parks’ reopenings, meanwhile, promise more profit in the short term too. And since they’re largely an outdoor pursuit, those parks should prove relatively pandemic-proof if coronavirus takes a turn for the worse.

The bigger picture: Be our guest.

Airbnb also notched a better-than-expected second quarter, but it suffered from the flip side of the trends buoying up Disney right now – and its stock initially fell 3% on Friday. With new virus variants still a largely unknown quantity, the online travel platform warned investors that this quarter’s bookings (and cancelations) could lead to disappointing sales.

Rocky road

Keep reading for our next story...

US Stocks Are Hitting High After Record High

US image

Positive moves on Friday left the US stock market up some 21% for the year so far – and almost everyone’s keen for a slice of the action.

What does this mean?

America’s key S&P 500 index has notched 47 all-time highs already in 2021: no mean feat, especially with new coronavirus variants popping up left, right, and center. Investors, for the most part, appear to be “looking through” that risk, betting that global economies and stock markets will emerge on the other side largely unscathed.

Companies haven’t been slow to take advantage of investors’ optimism, as evidenced by all those pricey initial public offerings and cash-light merger deals paid for in shares instead. But as things stand, the good times keep rolling: bullish stock backers have been vindicated – while those who called for caution may now be counting a considerable opportunity cost.

US stocks
Source: The Wall Street Journal

Why should I care?

The bigger picture: It’s always sunny in Shijiazhuang…

The US accounts for roughly half the total value of the world’s stock markets, making it a good barometer of investor sentiment globally. And in spite of the ongoing tensions between the two countries, the recent positivity has been reflected in China too. Local battery giant CATL on Friday announced plans to raise $9 billion from investors to further ramp up production – and rather than worrying about the value of their existing stakes getting diluted, investors took that punchiness as a signal to push up CATL’s share price.

Global market caps
Source: Visual Capitalist

Zooming out: …until it isn’t.

Electric vehicles are the future of the world’s auto industry – and nobody’s more aware of that fact than pioneering producer Tesla. But the cars of tomorrow (and today) need microchips, and the company’s CEO last week accused semiconductor suppliers Bosch and Renesas Electronics of holding up auto manufacturing around the planet. Rival carmaker Volkswagen is already suffering the effects: chip shortages contributed to its sales falling in July, particularly in the all-important Chinese market.



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