CNBC’s Jim Cramer says Disney’s stock still has plenty of upside, fueled by the blockbuster success of its latest live-action remake, Lilo & Stitch.
After a string of box office disappointments, the film’s surprise performance is breathing new life into the entertainment giant.
Lilo & Stitch makes box office history
The live-action adaptation of the beloved 2002 animated film smashed expectations with a $183 million domestic debut over Memorial Day weekend.
This is the highest haul in the Memorial Day Weekend, beating Top Gun: Maverick’s $160 million in 2022.
Globally, Lilo & Stitch pulled in $341.7 million, making it Disney’s third-best live-action opening of all time.
Notably, the film was originally planned as a Disney+ exclusive before executives decided to pursue a theatrical release.
The famed investor said that the movie’s success is a big sign that the stock is still “undervalued” and can still go higher.
Rival Studios trail as Disney regains momentum
The movie’s impressive debut stands in stark contrast to its rivals. Paramount’s Mission: Impossible – The Final Reckoning, starring Tom Cruise, made just $77.5 million domestically over the same weekend.
The stark difference underscores a resurgence in demand for family-oriented and animated franchises, areas where Disney traditionally leads.
Cramer said that Lilo & Stitch is seen as a “return to roots” for Disney and is not seen as a political movie.
After years of focusing on streaming, Disney may be rethinking its distribution model.
The win comes amid a challenging few quarters for Disney’s film division, especially in the superhero genre.
Films like Snow White and Captain America: Brave New World underperformed at the box office, raising concerns about franchise fatigue and storytelling quality.
Wins for the CEO and CFO
The CNBC host of Mad Money said the box office juggernaut is a win for Disney CEO Robert Iger.
Cramer praised Iger’s focus on profitability, focus on franchise-based story telling and creative control.
Iger returned to Disney in 2022, replacing Bob Chapek who was his successor.
The investor was also positive about former PepsiCo CFO Hugh Johnston’s appointment as CFO.
Johnston, according to Cramer, brought much-needed stability to Disney’s finances.
Disney’s stock has climbed more than 25% in the last month. The shares jumped more than 2% on Tuesday.
Firing on all cylinders
Cramer believes Lilo & Stitch could add more to its gigantic haul due to strong projections.
He believes the stock has more earning power with its film and theme park businesses starting to fire.
The company reported stronger-than-expected results in its second quarter.
Its Revenue rose 7% year-on-year to $23.6 billion, beating estimates of $23.1 billion
Disney’s experiences segment revenue rose 6% to $8.9 billion against the expectation of $8.7 billion.
It noted higher spending and attendance at US parks.
The company is also investing over $60 billion in Abu Dhabi over the next decade as part of its expansion strategies.
The improved performance comes after years of heavy investment funding in content and technology to build out the platforms.
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