Before you consider investing in Disney (DIS) stock, you should understand how the global entertainment behemoth makes its money. That way, you can also understand some of the factors that drive Disney’s revenues and stock price.
A diversified global entertainment company, Disney is involved in streaming movies and TV shows, operating resorts and theme parks, and selling content. As entertainment goes, Disney is already highly diversified, giving you exposure to a wide range of businesses, products, and services.
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Making sense of Disney’s businesses has been easier after the company reorganized its segments in 2021.
- Disney Media and Entertainment Distribution includes the company’s linear networks, content licensing and sales, and direct-to-customer entertainment services. The revenue of this segment originates from advertising, streaming services like Disney+, Hulu, ESPN, music distribution, live event licensing, etc.
- Disney Parks, Experiences, and Products covers its resorts and parks all over the world, together with its vacation club and cruise line. This segment generates revenues from ticket sales, foods and beverages, sales of branded merchandise, and hotel stays.
Interestingly, the linear networks segment of the company posted the highest revenues in Q1, 2022, contributing $7.7 billion to the company’s bottom line. The Parks, Experiences, and Products segment generated $7.2 billion in revenues during the same period.
Like many of its high-profile competitors, Disney entertains plans to design a metaverse that will hopefully carry its entertainment offers into the future.
The company recently renewed its focus on local and regional content creation as part of its streaming services strategy.
Competition-wise, Disney is in a company of near-peer entertainment giants like:
How to Buy Disney Stock
Due to the company’s iconic cultural status that makes it immune to many of the traditional global economic shocks, Disney stock is an investment opportunity as well as a gift that may keep on giving over the years. Gifting Disney stock to friends and family has become fashionable as a potentially rewarding first foray into investing.
Investors have two options to gain possession of Disney shares.
- They can buy shares directly from the company. Disney features a direct investment plan that allows investors to deal directly with the company. Those who buy stock directly, must commit to minimum investment requirements and pay a higher stock price than investors who buy their stock through a broker. Disney’s program also features an enrollment fee.
- They can use an online brokerage account to buy shares in the entertainment giant. This option is cheaper but somewhat riskier. Some brokers don’t charge investors an account-opening fee, nor do they charge commissions on purchases. Investors should research their broker carefully before they commit to buying stock.
Does Disney Stock Fit Your Investment Portfolio?
As diversified as Disney’s businesses are, buying a single stock still entails more risks than buying into an index fund or an ETF. If you commit to buying Disney stock, you assume these extra risks. You should also consider the following:
- Does a Disney purchase affect the balance of your portfolio?
- Do you have any short-term goals with your investment? If so, what are your goals?
- Should you buy all your Disney stock at once, or should you dollar-cost average?
While you’re pondering how to invest in Disney stock, the company keeps making moves that boost its share price. Over the last year, it has overhauled its release schedule on its streaming products. The move significantly boosted Disney+ subscriber numbers.
Disney has also overhauled its FastPass park admission system, simplifying the process of queuing to go on rides in its parks.
Further reading tip: our basic guide on buying stocks in the UK.