Disney Shares: The Basics
Walt Disney Company is listed on the New York Stock Exchange under the ticker DIS. It currently has a market capitalisation of approximately $331bn, and being so large in size means it qualifies as a member of the Dow Jones Industrial Average index.
The firm is a global player — it has 10 offices in 8 different countries with the group headquarters found in Burbank, California.
Recent and Historical Market Performance
Disney shares have rebounded from their lows of about $100 printed in March 2020 and have recently printed all-time highs. Past performance isn’t an indicator of future price moves, but the 10-year chart shows the Disney share price generating returns for its investors over a long time-frame.
*68% of retail CFD accounts lose money
The stock might not be as volatile as some tech start-ups, but that’s a good fit for some investors. It has critical mass and an appetite for innovation. The recent moves into streaming demonstrate a willingness for the firm to boost revenues by getting the most out of its back catalogue of films.
Is it a good time to buy Disney stock?
The online broker, IG, has collated broker ratings on Disney shares and established that the average rating is currently ‘Buy’. A total of 10 of the 27 analysts tip the stock as a ‘strong buy’ and none marked the stock as a ‘sell’.
Future growth is tightly linked to the Disney+ direct-to-consumer streaming business and during 2020, that division reported revenue of $3.5bn, which was up 73% year-over-year.
Potential investors in Disney are keeping a close eye on streaming rival Netflix, which has recently tested the loyalty of its consumer base by increasing subscription charges. This could either see viewers switch to the cheaper Disney+ package or demonstrate consumers are willing to accept price hikes. Either way, Disney+ looks set to build on its near 100 million client base.
Disney’s other divisions also have the potential to rebound, and despite the perfect storm of events seen in 2020, the group’s revenue was down around 20%.
Steps to Buy Disney Shares
Online brokers have revolutionised the investment industry. Whether you’re using a desktop or mobile device, it’s possible to register with a trusted broker and, within minutes, buy Disney shares online. It’s cost-effective, reliable, and easy to do.
It doesn’t matter where you are located as the brokers are global operations and many have millions of existing clients taking advantage of the user-friendly service. If you want to buy Disney shares from the UK or the USA, the process is the same.
When you buy Disney shares, you get exposure to the future prospects for a global operator. Whether buying Euro Disney shares or those of Tokyo Disney, all operations are reflected in the price of Disney shares.
1. Choose a Broker
There are a lot of good and trusted brokers who are set up to make buying Disney shares as easy as possible. As the process of buying has been so streamlined, they offer a fairly generic approach, but some brokers focus on prioritising one part of the trading experience.
This list of good brokers is a short-list of firms that are established in the market and licensed by well-regarded financial regulators.
2. Open & Fund an Account
The process of registering for an account is done online and can even be completed from mobile phone handsets. Regulated brokers are required to ask a series of questions to build a profile of their clients. Going through the ‘Know Your Client’ questions doesn’t take long and can be useful as some of the questions are on subjects such as ‘what are your investment goals’.
Once you’ve completed the form-filling, it’s a matter of transferring funds to your new online account. Most brokers offer a large number of different payment methods, including bank transfer and debit and credit card. If you’re in a hurry to buy Disney shares, it is worth checking the time taken for the different methods to be credited in your brokerage account.
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3. Open an order ticket and set your position size
Once you’re past those stages, buying Disney involves locating the market, entering the amount you want to buy and clicking the ‘buy’ button. There are a lot of markets on offer and it’s a case of filtering through the different asset groups to find Disney, or alternatively, looking the firm up using the stock search function.
4. Set your stops and limits
Stop Loss and Take Profit orders are instructions built into your trades that automatically close out positions if price reaches a certain level. Stop losses are a risk management tool that ensure you cut a position that goes against you. Take Profits lock in gains if price reaches your target price.
Some brokers also offer Limit Orders, which allow you to set your target price for opening a trade. If Disney shares are trading at $200, for example, you can instruct your broker to buy the next time price reaches $195. There is no guarantee you’ll be filled on a Limit Order, but picking an optimal entry point can enhance trading returns.
*68% of retail CFD accounts lose money
5. Select & Buy Disney Shares
Clicking or tapping a screen is all it takes to buy Disney shares. There are two final checks to make — one comes before you click ‘buy’ and one afterwards.
- Before you buy, it’s important to check if you are buying the CFD instrument or buying the equity outright. CFDs allow you to use leverage and scale up the risk-return on the trade. This does mean that financing charges come into play. If you’re looking to hold your Disney shares for more than a few weeks, it’s likely to be more cost-effective to buy them outright. This article explores that subject in greater detail.
- After you trade, be sure to check your portfolio and that what you wanted to buy is what you actually did. Any errors are best corrected before price moves too far from your trade entry price.
Fees When Buying Disney Stock
The user-friendly nature of online brokers extends to the pricing schedules they apply. The majority make their money on the difference between the buy and sell prices they offer clients — the bid-offer spread.
This approach removes the need to factor in separate commissions into your calculations and also allows you to compare brokers to find the one offering the tightest Disney spreads.
|Live Account Fee||No charge||No charge||No charge||No charge|
|Demo Account Fee||No charge||No charge||No charge||No charge|
|Bid Offer Spread – Disney shares||$0.19||$1.39||$0.49||$1.05|
|Cash Deposit Fee||No charge||No charge||No charge||No charge|
|Cash Withdrawal Fee||Yes – $5 per transaction||No charge||No charge||No charge|
|Inactivity Fee||Yes – $10 per month after 12 months inactivity||Yes – $10 per month after 3 months inactivity||Yes – $10 per month after 3 months inactivity||Yes – $50 per quarter after 3 months inactivity|
|FX Conversion Fee||Offers accounts in USD, only||Offers accounts in USD, GBP and EUR||Offers accounts in 14 base currencies incl. USD, GBP, EUR||Offers accounts in USD, GBP, EUR, CHF|
|Minimum Deposit||$200 (or equivalent)||$100 (or equivalent)||$250 (or equivalent)||$100 (or equivalent)|
There are some other administrative charges to factor in. Some of these can be avoided if you instil some discipline into your trading. Trying out the demo accounts of different platforms is recommended as it will not only allow you to practise trading but also get a better understanding of each broker.
Once you’re on the platform, it’s easy to dig down into the T&Cs and make sure your Disney trading strategy can be carried out in a cost-effective manner.
Full Overview of Disney
Niche and History
Disney’s operations date back to the era of silent movies and were initially focused on family entertainment. The firm built such a strong brand in that area that its name has come into common usage. During the 1980s it broadened its approach and moved into different markets and adult entertainment. Films such as The Dead Poets Society (1989) and Pretty Woman (1990) opened up new markets. At the same time, the Disney renaissance saw a renewed interest in the classic animations such as The Little Mermaid (1989) and The Lion King (1994).
It’s been no stranger to engaging with disruptors who were pushing boundaries. In 1989 it formed a partnership with muppet creator Jim Henson and in 2012 bought the Star Wars franchise for $4.05bn. Despite the hefty price tag on the purchase of Lucasfilm, Disney has managed to successfully leverage the brand and make a profitable return.
The strong bond between the public and the firm cuts both ways and often means boardroom fall-outs spill into mainstream press. The fallout between Disney and Pixar is one example of when the challenges faced by the firm were publicly exposed.
*68% of retail CFD accounts lose money
- Disney's EBITDA– Revenue For the three months ended 02 January 2021, Walt Disney Co revenues decreased 22% to $16.25bn. Net income before extraordinary items decreased 99% to $29m, largely due to revenue crashes at Disney Parks, Experiences and Products division.
- Disney’s P/E ratio– 39.58. The average P/E ratio for the DJIA index is 32.91
- Disney’s PEG Ratio– 5yr expected is a toppy 4.67
- Disney Share Dividends– Dividends are paid semi-annually. The 1H dividend for 2020 was suspended but the 2H dividend of $0.88 per share was distributed.
- Disney’s Dividend Yield– the average dividend yield over the last five years is 1.36%
Disney's Ethical Rating
Being associated with producing films with fairy-tale endings raises challenges when the cold realities of running a business come into play. Disney’s approach to ethical issues may not be out of line with its peer group, but it does attract more than its fair share of attention.
Considering the scale of the firm’s operations, Disney has relatively successfully navigated the thorny issue of environmental concerns. It did find itself called out for serving shark fin soup in 2004 but quickly withdrew it from its menus. Selling a dream experience involves a lot of thought and Disney’s ecological footprint continues to be carefully managed.
Treatment of Workers and Local Communities
In April 2020, the consequences of the COVID pandemic resulted in Disney announcing it would be suspending pay to 100,000 employees. Staff were advised to apply for government support and the firm saved $500m per month. Passing the costs of supporting staff on to the public raised eyebrows, particularly as the Disney share price has recently hit record highs and the firm still paid out a dividend to investors.
Disney is well aware that to attract long-term investors, it needs to demonstrate a degree of corporate responsibility. It breaks its approach down into four categories.
- Environmental Stewardship (Environment)
- Conservation Fund (Environment)
- Charitable Giving (Philanthropy)
- Volunteering (Philanthropy)
Taking the ‘environmental’ category as an example, the firm states it is “committed to protecting the planet and delivering a positive environmental legacy for future generations as we operate and grow our business” (Source: The Walt Disney Company). Investors will note the reference to ‘grow’ and take comfort that sustainability and returns are intended to work hand in hand.
Film critics, scholars and the general public have for some time criticised the firm’s portrayal of ethnic and minority groups. Social media has given critics a platform to share their ideas more easily, and as Disney operates in a consumer-facing industry, this can create challenges.
Walt Disney shares, buy or sell? The company’s share price has certainly posted an encouraging recovery since the deepest depths of the pandemic. Does the rebound mean potential growth is already priced in? Or was the Disney share price’s surprising resilience a sign that investors need to look past the high profile theme parks that form only part of the firm’s now diversified revenue streams?
Disney has critical mass and the opportunity to move into growth sectors. It can’t be guaranteed that the firm will be successful in executing that strategy, but for many, now is the right time to buy Disney shares.
The best news, particularly for new entrants into the market, is that the process of buying Disney shares is now a user-friendly and cost-effective experience.