Barclays downgrades Walt Disney after three years By Reuters
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© Reuters. FILE PHOTO – A smartphone sporting the Disney logo on it is shown in front of “Streaming service” words in this illustration from March 24, 2020. REUTERS/Dado Ruvic(Reuters) – Walt Disney (NYSE) Stock received an unusual Wall Street downgrade Monday as Barclays (LON.) The media mogul called for drastic changes to reverse the slow growth in its streaming service, Disney+.
Bob Chapek, Disney chief executive officer, hinted last month at a slowdown of Disney+. The fourth-quarter global paid subscriber growth was “low single digit million” compared to an increase of 58.5million in the three prior months.
Disney+ is one of the most valuable media assets and had an amazing launch in 2019. It attracted new customers with its popular “Star Wars”, “Avengers” franchises.
Netflix Inc (NASDAQ) and Apple (NASDAQ) TV+ have taken a completely different approach to streaming than rivals like Amazon Prime Video (NASDAQ) and Amazon (NASDAQ) Prime Video. To attract subscribers, they invested heavily in original content.
Kannan Venkateshwar, a Barclays analyst said that while Disney appears to target one piece of content per week, it is not all content has the same visibility or franchise value.
Barclays stated that the decline in Disney+ subscriptions could not solely be explained by a push forward in new subscribers for 2020. These were a time when streaming platforms became popular as more people settled down to seek entertainment.
Barclays predicts that Disney needs to grow its subscriber base to Disney+ by more than twice the current rate to achieve the target of 230million to 260million Disney+ subscribers before the fiscal year ends in 2024.
Netflix is expected to release its quarterly results on Tuesday. As of the June quarter, it had 209,000,000 subscribers. Disney+ has 116 million customers.
Disney shares fell by about 2% during early trading, but haven’t been downgraded yet this year.
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