Disney Is All About World Building

The Mouse is out of the house and running wild on shorts today. Disney (DIS) turned in stellar bottom line numbers on Thursday after the bell, posting earnings per share of $1.07, $0.12 ahead of expectations on revenue of $19.1 billion. The revenue numbers basically were in line with expectations, but management did a solid job controlling losses at ESPN+ and Hulu.

My view is Disney doubters have one major fallacy with their view on Disney. It isn't traditional media. And it isn't Netflix (NFLX) , in terms of being non-traditional. It's all about world building.

Stop and think about the true blockbusters, the types of shows and movies that consistently go viral. We can't stop tweeting about them, whether it is leading up to the release, during their run, or long after they finish. Characters that sell merchandise and become iconic Halloween costumes. Settings that become modern day landscapes in amusement parks, wedding themes, or the front yard of an admiring fan.

Disney is one of the best in creating worlds. That separates it from other media companies.

Think about what George R.R. Martin did with Game of Thrones or the Duffer brothers with Stranger Things or J.K. Rowling with Harry Potter or Leigh Bardugo with the GrishaVerse. These are some examples of talents that created unbelievable worlds. In some cases, we are stepping through a portal while in others we are simply someplace or some time else. But here's the rub, the ability to do so with billion dollar plus success is few and far between, but Disney continues to do it time and time again.

They create worlds we want to live in, experience, share with our children, and it is about more than just Star Wars. It's not a single hit or a single world. Marvel is now bigger than Star Wars in my view. Avatar will likely rival it. The Simpsons may not rise to that level, but it's an escape that many enjoy and has displaced names like the Flintstones or the Jetsons or Bugs Bunny when we talk about go-to animation.

I'm not going to sit here and list all the worlds or iconic characters or franchises that will carry Disney beyond traditional media, but it is worth noting for every single one we see from NBC (CMCSA) or Viacom (VIAB) or Netflix or HBO (T) or CBS (CBS) , we're seeing five-fold or ten-fold from Disney. At some point, I think we could see an acquisition to facilitate a later break apart of Disney into two pieces to unlock value, but for now, I believe the traditional valuation metrics don't account for the biggest component of value.

In terms of price action, a weekly close over $140 is really what the bulls need. Otherwise, we're stuck in this continued $130 to $140 trading range, which makes buying above $132-$134 challenging. Right now, it is a buy as close to $130 or over $140 rather than in between. The $127.50 mark offers a nice stop, risk-management mark while $145 to $147.50 is the high end of near term expectations and a point I would consider at least partial profits if long and not selling unless a downside stop is triggered. Despite the move higher today, we really aren't oversold in the secondary technicals. In fact, the Full Stochastics and Chaikan Oscillators are only crossing bullish this week.

Overall, I'm sticking with the game plan I presented earlier in terms of buy and sell points.

I'm out for now, but will look for reentry soon.

(Disney, Comcast, and Viacom are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells these stocks? Learn more now.)

At the time of publication, Timothy Collins had no position in the securities mentioned.