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While Disney is always a step ahead in spending millions of dollars to grab viewer’s attention all over especially in India - biggest overseas market, Amazon keeps on testing technologies and strategies to bring something new to capture the market.
The two have been in the news recently. Here is why.
Disney CEO steps down
Bob Iger has ended his more than a 14-year stint as CEO after expanding Walt Disney Co. into one of the most powerful entertainment conglomerates of Hollywood.
From integration of Pixar, Star Wars and Fox’s Entertainment businesses to launch of a Netflix challenger- Disney Plus streaming service, Iger has done a brilliant job in steering the company across numerous multibillion-dollar acquisitions.
Disney has named Bob Chapek as the chosen man for the job who has been the chairman of Disney’s parks, experiences and products divisions until recently. However, Iger will take up the role of executive chairman and look after the company’s creative endeavours until his contract ends on December 31, 2021.
Ever since Iger became the chief, Disney’s stock has shown a five-fold increase. However, shareholders did not seem to be ready to say goodbye to Bob Iger. The stock fell more than 2% after the announcement of him leaving the company was made.
Amazon morphed into a cashless supermarket
Amazon opened its first cashless Go grocery store in Seattle on Tuesday with about 5000 items for sale. The Amazon Go Grocery store has more than four times the space of the original on the go type stores opened in 2018. Shoppers can pick the items as per their need and can walk out. The respective accounts of the customers are charged via a smartphone app when they walk out of the store.
Amazon has been running several cashless Go convenience stores since 2018. This is the first time that this expertise that has been applied on this large a scale. It provides various options to shoppers to make their picks from organic produce to wine, making it a very viable option compared to the usual weekly shopping.
Accurate weighing and pricing for goods have been the key focus for the larger stores. As per a media report, the company has been contemplating licensing of its cashless platform to a number of potential partners, involving other convenience stores and shops in airports and sports arenas.
Looking at the way the technology is evolving, the days are not far when carrying a wallet will totally become redundant.
Stock prices to fall amidst coronavirus fears:
Negative headlines might keep a lid on shares of Amazon
From the beginning of 2020, Amazon’s stock has been underperforming, which was a result of not very impressive performance over the previous six months. But after ending January 2020, company stock has been soaring to higher levels. The January 30, 2020 release of Amazon’s fourth quarter FY2019 earnings report showed stronger than expected revenue growth of 21%, indicating that the company’s constant efforts in speedy shipments are leading to more purchases.
There was a 32% increase in subscription business such as Prime, 34% jump from web services unit of Amazon and 41% from other advertising business activities of the company. Despite rising costs, the tech giant posted a rebound in net income and exceeded earnings estimates by 60%.
Amazon web services, Prime memberships and streaming services are likely to be growth drivers for the e-commerce giant on a longer-term.
However, the company’s stock has been falling since the past week.
Coronavirus outbreak is one of the reasons. As a result, the market reacted to it by an overall decline in prices.
Supply chain disruptions due to coronavirus outbreak have led markets to decline.
The overall negative news flow might have a disruptive impact on the sentiment of consumers, which might further affect stock prices.
The yield on 10-year US treasury has shown a fall as rising coronavirus fears raised concerns about global economic environment and its projected growth. So, investors are pulling out of riskier assets; lowering of yields have led to a drag on the overall market sentiments.
Disney stock price on a temporary fall but retains positive outlook
Disney is one of the most successful entertainment media giants. However, it is vulnerable to pandemic concerns since it has theme parks with a huge expected footfall to drive revenues. The company reported total revenues of $21 billion in the first quarter of 2020, driven by a sharp rise of $6 billion in direct to consumer division. There was an increase in its Media Networks, Parks and studio revenues reflecting growth in all its operating divisions.
Disney stock has benefitted from its robust performance in the first quarter of 2020 from its new launch of streaming service Disney Plus in November 2019. From rocking the box office with its highest-grossing movies to gathering revenue from tourist visits to its gated attractions, Disney’s stock is expected to fare decently in the short to medium term.
With Disney’s takeover of Hotstar, which it acquired through $71 billion purchase of 21st Century Fox in 2019, it is all set bring to the Indian market its streaming services, Disney+, on March 29, 2020, attracting millions of potential subscribers.
With greater international penetration, will come higher revenue growth. Hence, better than anticipated result and a memorable launch of Disney Plus accompanied by a positive traction on growth plans in India are expected to facilitate Disney’s stock price to head higher in the short term. However, negative market sentiment and coronavirus outbreak can act as a drag on its stock price.
