I know what you're thinking. Jacob, how could you say you're not investing in the Mouse? It's one of the most popular stocks among millennials. After all, the term, "Disney Adult," is coined with my generation in mind. However, I'm not a big fan of the stock and I have five reasons why.
The Momentum of Disney+ is Getting Harder to Maintain: There are numerous subscription services to watch on-demand content, i.e. Hulu, Peacock, and Netflix. The market for this is growing quickly, leaving less wiggle room for Disney to grow. Yes, the House of Mouse's service added 11.7 million more subscribers in Q1 of 2022. However, the diluted market will make it harder for there to make a wish upon a star come true.
The Stock is Severely Overvalued: Sitting at a P/E ratio of 82.57, Disney stock has more weight than its earnings can hold. In fact, the company's EPS missed the Q4 2021 mark by 23.41%.
Its Revenue is Hit-Or-Miss: I know, Disney produces so many bangers of movies! But the past four earnings calls have yielded mixed results. Disney has beaten revenue expectations twice in the past four calls, raising some concerns. The Burbank-based company can acquire as many assets as it wants. But it must produce better results on the profit side.
No Dividend! The House of Mouse hasn't had a dividend since Q4 2019. Granted, that's likely to change in the future. But losing momentum in your dividend growth is never a good sign.
Backlash: It's not Disney's fault since they're on the right side of matters. But fans have retaliated against the company's "wokeness." Perhaps this will help them become a better buy. But it might work against them if the crazies boycott the corporation for evolving.