Yingwei Financial Information Investing.com-media entertainment giant Walt Disney Company (NYSE:DIS) and the global coffee retail chain giantStarbucks Corp (NASDAQ:SBUX)Are considered to be the best representatives of American consumerism. However, because of this, the businesses of both giants were hit hard in 2020, when the COVID-19 epidemic was raging-people were forced to "socially alienate" and coffee shops and theme parks were forced to go out of business.
However, with the reopening of the global economy and watching consumers gradually return to normal lives and reopen their wallets, both companies are also being closely watched.
For investors, both stocks may provide investors with attractive risk returns, especially in the context of considerable uncertainty in the direction of the epidemic, we will further interpret it for you below:
Walt Disney Company: the pace of restart is accelerated, and "Disney+" is underestimated?
Walt Disney Company is currently in a severe downturn, and the company's theme parks, resorts, cinemas and oil tankers have all been closed due to the spread of COVID-19 's epidemic, and its core business has been dealt a severe blow.
Hit by this unprecedented challenge, Walt Disney Company reported a $1.4 billion drop in revenue in the first quarter, of which the closed theme park alone lost $1 billion, and the rest came from other departments.
Although the epidemic has dealt a devastating blow to Walt Disney Company's global business, investors have recently begun to be bullish on Walt Disney Company's stock again, mainly because Wall Street investors are optimistic about the resumption of his "Disney+" streaming business and some entertainment assets.
The Burbank, Calif.-based company's shares have rebounded sharply after plunging 40 per cent in mid-March, closing at $118.66 on Tuesday, up 2.10 per cent in intraday trading and 2.27 per cent in subsequent trading.
There is no doubt that "Disney+" is a bright spot under the company's bleak outlook. The business is expanding rapidly, driven by a surge in family package bookings. Since its launch last November, it has attracted more than 56 million users. Although it has not yet made a profit, the strong growth momentum of "Disney+" is gratifying, and the future is expected to become one of Walt Disney Company's main sources of income.
Goldman Sachs GroupAnalyst Brett Feldman believes that Walt Disney Company's theme park and movie parts are expected to fully recover after the epidemic, and investors underestimate the potential of "Disney+", which is expected to have 150 million users by 2025.
Last week, Walt Disney Company's largest theme park in the world reopened after four months of closure, and Josh D'amaro, chairman of Walt Disney Company's park business, also said, "when we reopen the reservation system, we saw an outbreak of demand, and this demand change is not only in the short term, but is expected to continue until 2021." Goldman Sachs Group gave Walt Disney Company a "buy" rating, with a target price of $137.
Starbucks Corp: the future is still full of uncertainty, and the launch of the cache store will be accelerated.
The COVID-19 pandemic has also changed the way Americans buy coffee drinks and restaurants, leaving the future of coffee chain giant Starbucks Corp uncertain.
Starbucks Corp's share price has fallen 15% so far this year, a small drop compared with many of its peers. The stock closed up 0.11% at $72.73 on Tuesday, up 1.44% in after-hours trading.
Sales are expected to fall by up to $3.2 billion and revenue by up to $2.2 billion in the second quarter, according to the company's previous guidance.
The prospects of food chains, including Starbucks Corp, are still "precarious", and in the post-epidemic era, some consumers may permanently change their behavior and avoid patronizing restaurants.
Nonetheless, Starbucks Corp is still an innovative company that is rapidly changing its business model to cope with the economic slowdown caused by the pandemic.
Among them, Starbucks Corp told investors last month that the company plans to accelerate the launch of a "cache store" (Pickup Store), which is ordered by the mobile end and does not have seats in the store. "We initially planned to implement this strategy within 3-5 years, but the rapid change in customer preferences has forced us to speed up the process of this concept." Starbucks Corp expects to open 300 stores in North America this fiscal year, about 50 per cent of the previous estimate, which includes closing 400 stores in the next 18 months and "opening more new and repositioned stores in different locations. And adopt innovative store models."
Total knot
Walt Disney Company and Starbucks Corp may not be able to return to their previous income levels in the short term until COVID-19 vaccines or specific drugs appear. However, both companies have strong balance sheets and brands, and they should be able to withstand the current downturn and get out of it after the outbreak.
Investors with long-term value of Walt Disney Company and Starbucks Corp for five years or more may want to take advantage of the current trough in share prices and hold their portfolios for a long time.
[this article is from British Financial Information Investing.com. For more information, please log on to cn.Investing.com or download British Financial Information App]
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(compiled by Li Shanwen)