The Walt Disney Co. (DIS) is a leading global entertainment and media business that owns numerous extremely popular and valuable franchises, characters, and businesses, such as Star Wars, Mickey Mouse, and Pixar. Between the wide name recognition of both the business’ brand and its individual products, DIS possesses compelling competitive advantages and pricing power that derive from its strong pricing power and customer loyalty. (See Disney stock analysis on TipRanks)
The main value for DIS comes from the numerous ways in which it monetizes its powerful brands, vast library of highly valuable content, and large and loyal global consumer network. Between its wildly popular theme parks, feature-length Hollywood films, toys and apparel, sports and other themed TV channels, and its recently added high-growth streaming businesses, DIS is a very profitable and well-diversified business. It has been able to generate strong returns on equity, and can be expected to have strong staying power for decades to come.
Additionally, with a BBB+ credit rating from S&P, no dividend to burden the balance sheet, and nearly $16 billion in cash on hand, the company is in great shape to weather any unforeseen challenges. Moreover, it simultaneously invests aggressively to emerge a winner in the highly competitive streaming wars.
That said, the streaming wars will not be easy to win. Amazon (AMZN) just announced a massive $8.45 billion acquisition of Hollywood studio MGM (MGMB), significantly upgrading its already highly competitive position in the space. Meanwhile, AT&T (T) recently made a significant deal as well to bolster its media and streaming business. Last but not least, Netflix (NFLX) continues to invest aggressively to retain its position as the world’s number one streaming giant.
Valuation Metrics
Despite the heavy competition, DIS still has a good chance to emerge a winner. Its pluses include a massive existing content library, powerful brands, deep pockets, and strong pool of in-house talent that it can draw on to create new content.
Additionally, the valuation is reasonable. The price to forward normalized earnings is fairly high at 46.5x, but revenue is expected to surge by 25.2% in 2022 and normalized earnings-per-share are expected to grow by 19.4% in 2021 and 109.4% in 2022. That makes today’s price a more reasonable 35x expected 2022 earnings.
Wall Street’s Take
From Wall Street analysts, DIS earns a Strong Buy from average analyst consensus, based on 18 Buy ratings and 3 Hold ratings in the past 3 months. Additionally, the average price target of $209.89 puts the upside potential at 17.5%.
Summary and Conclusions
DIS has a a long and rich history of entertaining generations of loyal fans of its numerous popular franchises. Furthermore, it is well-positioned to emerge a winner in the cutthroat streaming industry.
Nevertheless, it still faces numerous challenges from companies like NFLX, AMZN, and others who are also investing aggressively to strengthen their positions in the streaming space. Meanwhile, Disney's other business should continue to thrive and achieve steady growth for decades to come. Particularly, its theme parks should recover nicely over the next few years as COVID-19 headwinds dissipate.
Overall, the business is likely to continue growing and analysts remain very bullish on the shares here. Given that the valuation remains reasonable, it could be an attractive way to invest in the continued growth of the streaming industry.
Disclosure: On the date of publication, Samuel Smith had no position in any of the companies discussed in this article.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.
The company doing it all and doing it well, just can’t stop winning. Amazon.com Inc. (AMZN) continues to expand its profitability in multiple sectors, including e-commerce and its Amazon Web Services cloud computing products, as well as on its streaming media platform, Prime Video. This media service has recently made massive investments to expand its content library, and seems to be expanding so fast that its hidden value as an empire can be overlooked. (See AMZN stock analysis on TipRanks)
In her May 27th report, Laura Martin from Needham & Company details several highly profitable and expansionary moves that Amazon has made as of late. All pertain to its media platforms Prime Video and Twitch.
Martin notes three recent 2021 Prime Video investments. Namely, Amazon has reached a deal with the NFL to host Thursday night football games for the next 11 years, totaling $11 billion. It has also completed a $465 million purchase of exclusive rights to create Lord of the Rings content, as well as a high-profile $8.45 billion acquisition of MGM studios. The company spent all this cash just to boost Prime Video to compete with Netflix Inc. (NFLX) in the increasingly dramatic streaming wars.
Martin published a Buy rating and assigned a 12-month price target of $4,150, representing a potential upside of 28.76%. On TipRanks, Laura Martin holds a five-star rating, and is ranked as #132 out of a total of 7,535 analysts.
Calculated by TipRanks, the average analyst price target is $4,295.17, reflecting a potential upside of 33.26%.
Martin asserts that Amazon is to be viewed far beyond the typical lens of an e-commerce or even a cloud computing company, stating that its portfolio of media assets amount to around $920 billion, equating to 53% of Amazon's enterprise value.
She adds that Amazon Prime Video is not just a profitable enterprise, but complements the e-commerce side of the company by pulling in consumers to its ecosystem and "elongating engagement and time spent with AMZN brands." Additionally, she states that Prime Video has a better business model than Netflix and does not permit as much password sharing. Prime Video's subscription costs are much lower than Netflix's, and it has almost four times as many movies as Netflix available in its content library.
Furthermore, Martin argues that the video-game aggregation and streaming service Twitch, which is a subsidiary, is the "most underrated" media asset in Amazon's holdings. Twitch saw increased consumer engagement due to the COVID-19 lockdowns, and currently dominates the live video game viewing industry.
Martin anticipates that Twitch will generate 20% more revenue year-over-year from 2020. Twitch also ties game developers into Amazon's ecosystem by bundling with Amazon Web Services's servers in order to host gaming streams. Martin admits that Twitch is only about 1% of Amazon's enterprise value, but has massive potential to seize the industry as it continues to grow.
Through recent acquisitions and investments, Amazon's media empire has made it clear that it has no intention of slowing down for years to come.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
Despite blockchain’s immense potential to decentralize many activities, it is surprisingly supported by many centralized players that wield incredible power.
One area where this reality is glaringly evident is NFTs. Besides for the challenges this new creator trend is encountering in terms of security holes and patchy infrastructure, most enthusiasts and users don’t understand the troublesome nature of NFT storage.
Most NFTs are stored on centralized servers and cloud providers, such as Amazon Web Services (AMZN) or Google Cloud (GOOGL). This effectively means that one of the chief advantages behind decentralization isn’t a core component of the NFT arena. That could potentially result in a single point of failure: if the storage provider is breached or encounters a system malfunction, an NFT stored in this manner could be lost forever.
To remedy this obvious flaw in existing NFT storage architectures, Bluzelle has expanded its offerings beyond its traditional database services to include a decentralized storage mechanism. By replicating NFT files across validator nodes, Bluzelle can ensure that NFT creations benefit from all the attributes of decentralization while avoiding the pitfalls of centralized storage. (To learn more about other cryptocurrency stocks, check out the TipRanks Cryptocurrency Stock Comparison tool)
Bluzelle 2.0 Rolls Out the Red Carpet to NFTs
While NFTs are currently more focused on art, Bluzelle sees immense potential in the creator economy. From the organization’s perspective, NFTs will play an important role in securing intellectual property, making it vital to decentralize the creative process and, more importantly, file management and storage.
Bluzelle 2.0, the newest iteration of the service, transforms the initial data layer solution for dApp developers into a decentralized storage provider. The rollout of this new version accompanies significant developments that have taken place since the outset of the year. Bluzelle has introduced multiple modules designed to add value to the network covering staking activities, cross-chain bridges, mainnet databases, and blockchain oracles, helping deliver greater interoperability.
Version 2.0 will be compatible with Ethereum and Binance Smart Chain (BSC), Polygon, and Fantom. However, the accompanying NFT infrastructure showcases the network’s significant strength in the storage realm. The decentralization of storage will ensure 100% uptime and access to NFTs hosted on the network while making them tamper-proof and more secure.
The forthcoming upgrades to the network expected over the following months will also be attractive for DeFi developers who require high network transaction throughput, a greater degree of cross-chain communication, oracles for pulling and pushing data, and decentralized data storage.
For the creator economy, Bluzelle’s leap represents a major step towards actual decentralization, helping fulfill blockchain’s vision of ending dependence on gatekeepers, rent-seekers, and centralized institutions that exert vast control over many industries.
Disclosure: TipRanks’ writers held no position in any of the stocks mentioned in this article at the time of publication.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.
Airbnb (ABNB) is the largest online booking agency/network for temporary accommodations, and also offers booking services for boutique hotels and experiences.
The company boasts a network of over 4 million hosts across 220 countries and over 100,000 cities. It generates just over half of its revenues in North America, another 30% in EMEA, and the rest in Asia-Pacific and Latin America. (See Airbnb stock analysis on TipRanks)
The main value for ABNB comes from online transaction fees for bookings on its website, which are generated through its massive host network. Its competitive advantage stems from its wide array of attractive and reasonably priced accommodation offerings that make it the booking agency of choice for travelers. As more people use it to book accommodations, Airbnb's moat is further widened.
Pluses and Minuses
The company is expected to continue generating strong growth on the back of the re-opening of the global economy from the COVID-19 outbreak. It should also perform well in its markets outside of North America. In those areas, Airbnb controls much less market share, but it still has a significant presence and strong brand recognition.
That being said, the company also has numerous challenges to contend with.
First and foremost, it already faces significant competition from the well-entrenched hotel industry and other competing sites like VRBO. Additionally, sites like TripAdvisor (TRIP), the large online travel agencies, and even some of the tech mega caps like Facebook (FB), Amazon (AMZN), and Google (GOOG) may decide to leverage their large troves of consumer data and existing customer networks within their own ecosystems to edge into Airbnb's market.
Any or all of these potential competitors mounting a major push into the space would compress margins significantly and put a major dent in ABNB’s growth and earnings potential.
Valuation Metrics
Despite these headwinds, ABNB still possesses a significant head start in the segment, giving it a significant edge to leverage in terms of industry-specific consumer data and network.
However, its valuation remains elevated. The forward EV/EBITDA is quite high at 109x and the company remains unprofitable on a net income basis. Analysts expect the company to generate $0.07 earnings-per-share in 2022, which would put the current share price at nearly 2,000 times 2022 earnings.
Wall Street’s Take
From Wall Street analysts, ABNB earns a Moderate Buy analyst consensus based on 12 Buy ratings, 16 Hold ratings, and 1 Sell rating in the past 3 months. Its average analyst price target of $174.08 puts the upside potential at 24%.
Summary and Conclusions
ABNB is facing significant headwinds right now, as it struggles to emerge from the COVID-19 pandemic while also facing potential competition from several deep-pocketed heavyweight companies. As a result, the company’s growth could take a hit in the near future and underperform expectations.
Nonetheless, it still has a lot going for it with a significant head start in industry-specific consumer data collection and network effect. Furthermore, it already has a foothold in countries across the globe and millions of loyal customers and hosts. Those users are already familiar with and loyal to Airbnb's platform and style, making them less likely to switch to a competitor.
Overall, the business is likely to continue growing and analysts remain bullish on the shares here.
At the same time, given the potential for reduced profit margins due to growing competition and the elevated valuation multiples at current prices, the stock could face significant downside if it fails to live up to lofty growth expectations.
Disclosure: On the date of publication, Samuel Smith had no position in any of the companies discussed in this article.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.