How Disney Stock Can Surge To $230

Core Insights - Disney's Q3 results show significant momentum in its streaming segment, helping to alleviate pressures in its television segment, although Netflix remains the leader in the streaming market [2][4] - Disney's direct-to-consumer (DTC) operations generated approximately $24.15 billion in revenue over the last 12 months, indicating potential undervaluation compared to Netflix's $41 billion [2][3] - Disney's streaming revenues increased by about 8% year-over-year, reaching around $18.37 billion in the first nine months of the fiscal year, with expectations to reach roughly $25 billion this year [3][5] Streaming Performance - The direct-to-consumer segment secured $6.2 billion in revenue in the most recent quarter, marking a 6% increase despite the divestiture of Hotstar operations [5] - Disney+ added 1.8 million core subscribers last quarter, bringing the total to approximately 128 million, while Hulu has around 55 million subscribers [5][8] - Disney's ad-supported tier is thriving, with nearly half of U.S. Disney+ subscribers opting for this version, driven by a strategy to increase prices on ad-free plans [6][8] Financial Projections - If Disney's streaming revenue continues to grow at about 12% annually, it could reach approximately $31.5 billion by FY'27, with potential operating profits of about $7.1 billion if margins improve to 25% [3][4] - Valuing Disney's streaming operations at around 30 times operating earnings could yield an enterprise value close to $213 billion, equivalent to Disney's current market capitalization [4][9] Competitive Landscape - Netflix has a significant lead with 301 million subscribers globally, while Disney has approximately 183 million when combining Hulu and Disney+ [8][9] - Netflix's average revenue per user (ARPU) exceeds $11.50 per month, compared to Disney+'s $8, although Hulu contributes higher ARPU of around $12 [8] Strategic Initiatives - Disney is set to launch a new direct-to-consumer ESPN streaming service on August 21, 2025, priced at $29.99 per month, which could serve as a growth catalyst [10] - Marketing expenses related to Disney's streaming business are declining, and bundled service offerings are likely improving subscriber retention [11][12] - Disney's broader value chain, including theatrical operations and theme parks, provides a more sustainable model for content monetization compared to Netflix [12]