World-famous Walt Disney < NYSE:DIS> has been known for generations as a provider of magical theme park experiences. At the current share price, DIS stock should be considered a strong buy.
Why has the stock declined sharply from its peak price? There's been a broad-market sell-off, but a recent development abroad may have caused some panic selling as well.
We'll delve into the details of that in a moment - but have no fear, as Disney's theme-park issues could be offset by a powerful partnership with a 5G leader.
What's Happening with DIS Stock?DIS stock jumped from $180 to nearly $200 in early 2021, before embarking on a slow but painful decline. By late March of 2022, the stock was down to the $140 area.
This should be viewed as a discount and an opportunity, not as a reason to sell. Disney remains a revenue-generating behemoth, as the company generated a whopping $21.819 million in revenue for the quarter ended Jan. 1, 2022. That result represents a 34% improvement over the quarter ended Jan. 1, 2021 - not too shabby.
Furthermore, Disney reported that in fiscal 2022, the company's domestic parks/experiences are "generally operating without significant mandatory COVID-19-related capacity restrictions, such as those that were in place in the prior-year quarter."
That statement only concerns the U.S.-based theme parks, however. In China, the onset of the Covid-19 omicron variant strain is evidently causing major problems.
"Due to the current pandemic situation, Shanghai Disney Resort, including Shanghai Disneyland, Disneytown and Wishing Star Park will be temporarily closed from Monday, March 21, 2022," the company announced recently.
The Shanghai Disney Resort will apparently remain closed until further notice as Disney "will notify guests as soon as we have a confirmed date to resume operations."
Modern StorytellingThat's unfortunate news - no doubt about it. On the other hand, Disney's shareholders can be reassured that the company's business model isn't entirely reliant on theme park revenues.
Times are changing, and Disney has changed as well. In the 2020s, Disney+ poses a serious threat to streaming content providers.
Now, the threat is even greater as Disney is partnering with telecommunications and 5G giant T-Mobile < NASDAQ:TMUS> for a five‑year innovation partnership.
Specifically, Disney Studios StudioLAB will work with T‑Mobile to "explore new innovations in how entertainment is produced and experienced." This, evidently, will include discovering "new ways to improve content production" and testing "new forms of immersive experiences."
That's vague language, but it's still exciting to consider what this collaboration will produce. At the very least, we should expect lightning-fast content delivery through T-Mobile's vast 5G network.
How will Disney Studios StudioLAB and T‑Mobile modernize the art of storytelling? Will it be through virtual reality, and even the metaverse?
Only time will tell, but it's hard to go wrong with a powerful partner like T-Mobile.
What You Can Do NowDomestically, it appears that Disney's theme parks are up and running without major problems. In China, however, that's not necessarily the case.
Still, this isn't a valid reason to panic-sell your DIS stock. Indeed, the T-Mobile partnership and the stock's low price should persuade you to consider a long-term position today.
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On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content - and crossed the occasional line - on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
DIS shares were trading at $136.59 per share on Monday afternoon, down $2.55 (-1.83%). Year-to-date, DIS has declined -11.81%, versus a -4.77% rise in the benchmark S&P 500 index during the same period.
About the Author: David Moadel
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
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