Why the stock could soon lose its magic

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ViennaIts shareholders are reluctant to surprise Robert Iger. That's why the CEO of Disney recently announced only what insiders had been expecting on an investor day. The time has come for his resignation in 2021, said the 68-year-old, who has headed the Mickey Mouse group for 14 years. In the same breath he promised his shareholders a "smooth transition" – even if no final crown prince is yet to be seen.

The sporty manager with the winning smile announced his mid-term exit from the operative business at a very opportune time. The Micky Mouse Group's stock reached historical highs of $ 130. By comparison, in June 2017, the stock was still below $ 78. The paper climbed more than 600 percent within ten years. The media giant with a market capitalization of more than 200 billion euros has never been more valuable than today.

For Iger, that's no reason to sit back. On the contrary: Disney enters in November 2019 in the fight against the streaming services Netflix, Apple, Amazon and Co. with its own offer. The service of the entertainment giant named Disney + will cost $ 6.99 a month less than that of its biggest rival, Netflix. The Silicon Valley company has just announced that it will raise prices in Europe.

Netflix is ​​weakening

Disney's pricing model is a challenge: Iger does not want to let Silicon Valley-based end-user businesses buy movies, series, and documentaries around the world. Therefore Disney + should be available not only from 12th November in North America, but also worldwide.

The moment has been skilfully chosen as Netflix's rapid growth is just starting to weaken. In the current quarter, the streaming service only expects a worldwide increase of five million subscribers. Analysts trust the Mickey Mouse Group a lot. More than two thirds of all market experts – from Morgan Stanley to Goldman Sachs to DZ Bank or Erste Group – recommend the stock for sale.

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Another third recommends holding the paper. The problem for investors: However, the stock price does not appear to have much upside. Even the biggest optimists among media analysts, such as Marci Ryvicker of Wolfe Research or Mark Zgutowicz of Rosenblatt Securities, have set price targets of $ 150 and $ 147, respectively. Drew Borst of Goldman Sachs expects Disney's paper to be priced at $ 143 for the time being.

Number one in Hollywood

Robert Iger wants to win with Disney + within five years 60 to 90 million subscribers. Netflix already has a much larger audience: According to its own data, the streaming service currently counts just under 149 million customers. But analysts trust the Micky Mouse Group to magical powers to catch up with subscribers to its streaming service.

"We believe that Disney + can reach 45 million subscribers in the home market and 115 million internationally," say market experts at JP Morgan. For them, the price target of the stock is $ 137. The confidence of independent experts has a reason. Iger was able to convince almost without exception with positive news in the past years.

After all, the native Californian has made Disney the undisputed number one in Hollywood. Unlike Netflix, which has to quickly bring together films, series and documentaries for its offering, Disney can make the most of its content. Since taking office, Iger bought one icon of the movie business after another.

As early as 2006, Steve Jobs acquired the animation studio Pixar ("Toy Story", "Cars") in Emeryville near San Francisco. Three years later, the acquisition of the Marvel Studios ("Avengers", "Spiderman", "Iron Man") followed in Burbank and finally in 2012 the north of San Francisco located studio of George Lucas ("Star Wars").

As recently as March of this year, the CEO bought 21st Century Fox, the Hollywood studio and a number of television channels of the media duo Robert Murdoch ("Wall Street Journal", "Sun", "Sky") for a total of $ 71 billion. Never before has Disney been better equipped to compete with the digital media consumer than today.

On the offensive with Disney +

Because the group has brands, feature films, animated films, live acts, shows and sports rights – the whole range of content business. With the streaming service Disney + the superheroes "Avengers" and "Stars Wars" are to run exclusively in the future. With the acquisition of Fox also global animation brands such as the "Simpsons" belong to the Mickey Mouse Group.

Iger believes that the exclusive exploitation of its brands has enough appeal to attract new customers to Disney + and take Netflix off subscribers. In the battle for medium-term supremacy in the streaming services, the financial scope plays a key role. Netflix clearly has the disadvantage.

Their revenue is just under $ 16 billion, the net profit is over $ 1.2 billion. Disney, on the other hand, recorded record revenues of over $ 59 billion last year. The net profit alone amounted to $ 10.6 billion.

The big unknown, however, is Apple. Only in March, the technology company had also announced its own streaming service for the fall. However, Apple CEO Tim Cook was reluctant with accurate information. So it is not yet clear how many customers have to pay for the service Apple +. The pricing strategy of the iPhone group should be interesting for Disney but: Finally, the two groups are indirectly connected.

Apple founder Steve Jobs rose by the sale of the Pixar shares already during his lifetime to the largest single shareholder of the Mickey Mouse Group. The stock package today belongs to his widow Laurene Powell Jobs. In turn, Disney CEO Iger has been on Apple's board of directors for eight years. He knows the strategy and the problems of the giant from Silicon Valley. The close ties between the two companies are causing much speculation in the market.

The announcements by Apple and Disney also show that the competition for streaming films, series, documentaries and live events has just begun. Therefore, positive but also negative surprises will not be lacking for Disney – despite the continuously positive developments in the Mickey Mouse empire.

Financials (t) Equities (t) Disney (t) Netflix (t) Apple (t) Amazon Prime (t) Streaming (t) Disney + (t) Mickey Mouse (t) Share (t) Investment (t) Investment Tip (t) Amazon (t) Goldman Sachs (t) Pixar (t) JP Morgan (t) DZ-Bank (t) Sky Germany (t) First Group (t) 21st Century Fox (t) Morgan Stanley (t ) Robert Iger (t) Steve Jobs (t) Film Industry (t) Film Production & Television Production

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