Government
Does the return of veteran “Boomerang Boss” Bob Iger give the Disney share price more upside?
Like many of the stocks to do particularly well during the Covid-19 pandemic, Disney has struggled since with its share price down…
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Like many of the stocks to do particularly well during the Covid-19 pandemic, Disney has struggled since with its share price down 38.63% this year. The multinational mass media and entertainment company’s valuation is down by over 51% since its high point of $197.16 set in March 2021.
Despite the positives like the Disney+ streaming service that rivals Netflix beating expectations by announcing year-on-year growth of 39% to reach 164.2, the Disney share price fell 6.9% after quarterly result were announced earlier this month. At one stage during after-hours trading the evening after the announcement, it dropped as low as $93.
Overall earnings and revenues disappointed investors with a $1.5 billion loss for the streaming division that also includes the sports broadcaster ESPN taking the shine off the success of Disney+ adding millions of new subscribers at an accelerating pace.
Despite total revenue rising by 9% to $20.15 billion during the three months to October 1, largely thanks to a strong post-pandemic recovery for Disney’s theme parks, the total fell short of analyst expectations for $21.2. Net income increased by 2% to $162 million.
Despite then chief executive Bob Chapek impressing that the streaming business was on course to reach profitability by 2024 “assuming we do not see a meaningful shift in the economic climate”, markets punished the Disney share price by dragging it to its lowest level since the February to March 2020 Covid sell-off. Of particular concern was the spiralling cost of ESPN’s investment in sports rights.
Bob Iger makes a comeback to replace Chapek as Disney’s new old CEO
What wasn’t expected in early November was that within a couple of weeks, Disney would have a new chief executive in the place of Chapek. The identity of Chapek’s replacement would come as a particular surprise. But 71-year-old Bob Iger, the veteran Disney chief executive that handpicked Chapek as his replacement upon announcing his 2020 retirement after 15 years in the hot seat has indeed been tempted back.
In an email to Disney staff, Iger told them he viewed his reappointment to the top job
“with an incredible sense of gratitude and humility — and, I must admit — a bit of amazement.”
The market also reacted positively to news the Disney boss that presided over a period of impressive growth fuelled by acquisitions suck as Pixar, Marvel Entertainment and 20th Century Fox had been reappointed. The company’s share price leapt 10% when Iger’s return was announced before eventually closing the session to a 7% gain. PP Foresight analyst Paolo Pescatore is quoted by The Times as commenting:
“The bold move [Iger’s return] might feel like the right one. However, the business is at a different phase of growth.”
Wells Fargo analysts were even more emphatic, writing the move
“puts perhaps the best leader in Media at the helm with a mandate to shake things up.”
Netflix co-founder Reed Hastings made perhaps the most telling contribution to the return of Iger to the company that owns the streaming giant’s most serious competitor when he tweeted:
“Ugh. I had been hoping Iger would run for president. He is amazing.”
What must Iger fix at Disney to set it back on track?
Put most simply, Iger’s job in his return to the role of Disney chief executive is first to stem losses and then to restore profitability. It can be presumed that a review of the company’s approach to acquiring expensive sports rights will figure prominently in both stages of the hoped-for turnaround.
The activist investor Daniel Loeb, whose Third Point investment group is a significant shareholder in Disney and was given a seat on the board in August, wants to see ESPN spun off. Another major step towards profitability for Disney+ will hopefully be the introduction next month of a new cheaper advertising-funded subscription tier. Netflix has just launched its ad-supported tier in the USA, charging $6.99 per month compared to $15.49 for its standard ad-free subscription and $19.99 for a premium account.
Iger, who is reported to have had doubts about his choice of Chapek as his replacement after the pair clashed during the transition period, is seen as having stronger relationships with Hollywood executives and a better intuition when it comes to the creative side of the business. His major Hollywood acquisitions all contributed significantly to Disney’s growth under him during his previous period in charge.
It can also be presumed he will more successfully avoid distractions such as Chapek’s public culture war with Florida’s outspoken Republican governor Ron DeSantis over what teachers in the state can say on LGBTQ+ topics. There was also an embarrassing legal dispute with Scarlett Johansson, star of Disney’s Black Widow film, over the decision to release the production in cinemas and over its streaming platform simultaneously. There’s a strong feeling the situation would have been nipped in the bud under Iger.
Can Iger work some of his old magic in just 2 years?
Investors wondering if the current Disney share price represents an improved upside under Iger should start the thought process in the context that the old new chief executive has said his return will only be for 2 years. The question is how much can he get done in that time and if the next choice of his successor will prove a better one than Chapek ultimately proved.
Stemming streaming losses while still catching up on Netflix’s global market share will be the big challenge for Iger.
Disney+
The days of “growing streaming at any cost” are over for Wall Street, and Disney’s leadership under Iger will have to prove to investors that Disney+ can achieve profitability relatively quickly while also continuing to grow. This will move the needle on Disney’s share price more than anything else Iger might achieve.
Sports and films
Previously seen as a valuable asset, ESPN has been losing viewership recently despite huge investments in sports rights and that has been hurting the business. That’s the crux of Loeb’s argument the business should be “spun off to shareholders with an appropriate debt load”.
He’s since stepped back from that demand since being given a seat on the Disney board but the point was made and Iger will have to show he can make money from ESPN again.
Another issue is the revenue being generated by Disney’s film studios. In the year before the pandemic and Iger originally stepping down, Disney released seven films that each hit $1 billion in global box office takings. This year only two Disney releases have achieved the same level of success.
Iger must ask and answer the question of if streaming and the pandemic have permanently changed the landscape for cinema releases and adjust Disney’s strategy accordingly.
Can Iger drive share price growth for Disney?
It remains to be seen if Iger’s return to Disney will prove an inspired or desperate move but market analysts seem confident he can drive the company’s share price back up. Only the most negative analysts believe Disney’s valuation will drop over the next 12 months, and then to just $94, which is only slightly below the current $96.21 level.
Downside from the current valuation looks limited and on the upside, the median 12-month share price target of 25 analysts polled by CNN is $120, which would represent returns of almost 25%. The most optimistic analysts have a 12-month share price target of $145, which would deliver returns of over 50%.
Iger has a challenge on his hands and just 2 years to rise to it. But if early signs are positive, Disney investors are likely to be hailing the Boomerang Boss this time next year.
The post Does the return of veteran “Boomerang Boss” Bob Iger give the Disney share price more upside? first appeared on Trading and Investment News. stocks pandemic covid-19 governor recovery
Government
Student loan borrowers may finally get answers to loan forgiveness issues
A major student loan service company has been invited to face Congress over its alleged servicing failures.
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U.S. Sen. Elizabeth Warren (D-MA) wants answers from one of the top student loan service companies in the country for allegedly botching its student loan forgiveness process involving the federal Public Service Loan Forgiveness program, leaving borrowers confused and without answers.
The senator sent a letter to Mohela CEO Scott Giles on March 18 inviting him to testify before Congress at a hearing on April 10 titled “MOHELA’s Performance as a Student Loan Servicer.” During the hearing, Giles will have to answer for why his company allegedly failed to send billing statements to student loan borrowers in a timely manner and miscalculated monthly payments for borrowers when it was time for them to repay their loans in September last year.
Related: Here's who qualifies for Biden's student loan debt relief starting next month
Also, in the letter, Warren highlighted a report that claimed that Mohela failed to perform basic servicing functions for borrowers eligible for PSLF, which led to over 800,000 public service workers facing delays in receiving student debt relief. The report also accuses the company of using a “‘call deflection’ scheme” to keep customers away from speaking to a customer service representative and instead redirecting them to parts of their website.
“Your company has contributed to student loan borrowers’ difficulties by mishandling borrowers’ return to repayment following the COVID-19 pandemic-related pause on payments, interest, and collections and by impeding public servants’ access to PSLF relief,” wrote Warren in the letter.
The move from Warren comes after the U.S. Department of Education withheld $7.2 million in payments to its servicer Mohela in October as punishment because it failed to issue timely billing statements to 2.5 million borrowers which resulted in 800,000 borrowers becoming delinquent on their loans. The department ordered Mohela to put those affected by the issues into forbearance until the mess was resolved.
Mohela is also currently facing two class-action lawsuits, one filed in December last year and another in January this year, for its alleged “failure to timely process and render decisions for student loan borrowers enrolled in the Public Service Loan Forgiveness program.”
In response to recent criticism surrounding its alleged issues and failures regarding the PSLF program, Mohela claimed in a statement to the Missouri Independent that it “does not have authority to process loan forgiveness until authorization is provided by FSA, which can take months to occur.”
The company also claimed that there are “false accusations” inside of the bombshell report, which was released in February, that details the company’s servicing failures.
“It is unfortunate and irresponsible that information is being spun to create a false narrative in an attempt to mislead the public. False accusations are being disingenuously branded as an investigative report,” said Mohela.
white house congress pandemic covid-19International
Bolsonaro Indicted By Brazilian Police For Falsifying Covid-19 Vaccine Records
Bolsonaro Indicted By Brazilian Police For Falsifying Covid-19 Vaccine Records
Federal police in Brazil have indicted former President Jair…
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Federal police in Brazil have indicted former President Jair Bolsonaro for falsifying his Covid-19 vaccine card in order to travel to the United States and elsewhere during the pandemic.
Federal prosecutors will review the indictment and decide whether to pursue the case - which would be the first time the former president has faced criminal charges.
According to the indictment, Bolsonaro ordered a top deputy to obtain falsified Covid-19 vaccine records of himself and his 13-year-old daughter in late 2022, right before he flew to Florida for a three-month stay following his election loss.
Brazilian police are also waiting to hear back from the US DOJ on whether Bolsonaro used said cards to enter the United States, which would open him up to further criminal charges, the NY Times reports.
Bolsonaro has repeatedly claimed not to have received the Covid-19 vaccine, but denies any involvement in a plan to falsify his vaccination records. A previous investigation by Brazil's comptroller general concluded that Bolsonaro's vaccination records were false.
The records show that Bolsonaro, a COVID-19 skeptic who publicly opposed the vaccine, received a dose of the immunizer in a public healthcare center in Sao Paulo in July 2021. [ZH: hilarious, Reuters calling the vaccine an 'immunizer.']
The investigation concluded, however, that the former president had left the city the previous day and didn't leave Brasilia until three days later, according to a statement.
The nurse listed in the records as having applied the vaccine on Bolsonaro denied doing so and was no longer working at the center. The listed vaccine lot was also not available on that date, the comptroller general's office said. -Reuters
"It's a selective investigation. I'm calm, I don't owe anything," Bolsonaro told Reuters. "The world knows that I didn't take the vaccine."
During the pandemic, Bolsonaro panned the vaccine - and instead insisted on alternative treatments such as Ivermectin, which has antiviral properties against Covid-19. For this, he was investigated by Brazil's congress, which recommended that the former president be charged with "crimes against humanity," among other things, for his actions during the pandemic.
In May, Brazilian police raided Bolsonaro's home, confiscating his cell phone and arresting one of his closest aides and two of his security cards in connection to the vaccine record investigation.
Brazil's electoral court ruled that Bolsonaro can't run for public office until 2030 after he suggested that the country's voting system was rigged. For that, he has to sit out the 2026 election.
International
This gambling tech stock is future-proofing the world’s casinos
Supported by the universal thrill of a quick payout and the need for leisure, gambling stocks make a compelling case for long-term returns.
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Supported by the universal human thrill of a quick payout, and the need for leisure and entertainment to bring enjoyment to adult life, casinos will remain essential spaces for people to dream and play for the foreseeable future, making gambling stocks a prospective space to look for long-term returns.
According to Research and Markets, the global casino industry was valued at US$157.5 billion in 2022, and it will grow to US$224.1 billion by 2030 at a compound annual growth rate of 4.5 per cent. This trend includes:
Approximately 100 million gamblers in the United States, who generated US$66.5 billion in revenue in 2023, a 10 per cent gain from 2022, which itself was a record year A little fewer than 20 million gamblers in Canada, who generated about C$15 billion in revenue in 2023 A global addressable market of thousands of casinos, and more than 4.2 billion people who gamble at least once every year, according to a 2016 study by Casino.orgThe main challenge with attracting these billions through casino doors is they sway heavily toward middle age. The mean age of U.S. casino visitors has hovered around 50 for the past decade, with a similar trend across the world, forcing casinos to attract younger, tech-savvy customers, many with less gambling experience, to continue growing profits for their stakeholders over the long term.
Investors seeking exposure to a leadership position in building the bridge between casinos and the next generation of gamblers should evaluate Jackpot Digital (TSXV:JJ). The Vancouver-based company is a manufacturer of dealerless electronic table games that deliver immersive experiences tailored to the digital age, while earning casinos attractive returns on investment.
The gambling technology stock benefits from no direct competition in the dealerless poker space, with orders spanning North America, Europe, Asia, Africa and the Caribbean, a long-established presence with major cruise ship brands, such as Carnival, Princess Cruises and Holland America, and a growing land-based presence with orders or ongoing installations across 12 U.S. states. Its highlight partnership to date is a master services agreement with Penn Entertainment, the country’s largest regional gaming operator with 43 properties across 20 states.
Jackpot Digital’s differentiated technology and well-rounded management team are at the heart of its success in landing several blue-chip casino gaming companies as customers.
Jackpot BlitzThe gambling technology stock’s flagship product, Jackpot Blitz, is a dealerless poker table featuring three of the world’s most popular variations – Texas Hold’ em, Omaha, and Five-Card-Omaha – brought to life through slick 4k graphics on a 75-inch touchscreen, and offered in three formats – pot-limit, no-limit and fixed-limit – designed to attract a diversity of revenue from casual to experienced players.
Spokesperson and NFL championship-winning coach Jimmy Johnson explains the benefits of the Jackpot Blitz. Source: Jackpot Digital.The table also comes equipped with house-banked mini-games, including blackjack, baccarat and video poker, as well as side bets on the main poker game, such as Bet the Flop, all of which keep players engaged and entertained between, and even during, poker hands. The stunning Jackpot Blitz machine also offers multi-venue “Bad Beat” jackpot functionality, allowing casinos to offer a “Poker Powerball” with massive Jackpots, further enhancing the attractiveness of Jackpot Blitz to new players.
It’s by striking a balance between the needs of the modern gambler, and efficiency and profitability that in-person operators couldn’t hope to match – unless they ordered the machine for themselves – that Jackpot Digital has earned itself the top spot in dealerless poker.
Player benefitsWhen a veteran or novice gambler takes a seat at the Jackpot Blitz, his or her experience begins with an easy-to-use interface, laid out in a modern and stylish design, programmed to respond to hand gestures that bring real casino play into the digital age, including card bending and chip jingling.
Source: Jackpot Digital.The table’s intuitive controls, combined with instant payouts and its dealerless nature, translate into faster game play, which maximizes playing time and player excitement, while minimizing human error and the intimidation new gamblers might feel about approaching an analog poker table. The gambling technology stock’s in-house development team is also constantly working on new games to keep content fresh, with a special focus on bringing international games and regional versions of poker to casino audiences in Asia, South America and the Indian subcontinent.
As hands are laid down and pots pile up, players can also track game stats in real time, which inform future strategy and enhance the thrill of the moment with an added element of competition.
Operator benefitsFrom an operator’s perspective, a floor of automated gaming tables can meaningfully and instantly reduce casino staff expenditures and management pain points, while avoiding wage inflation, labour shortages and supply costs.
The Blitz is no slouch on revenue either, dealing more hands per hour, resulting in higher revenue and higher profitability, which is further enhanced by onboard side bets and mini-games that can be played while players are engaged in a poker hand.
The Jackpot Blitz’s economics are attractive to operators thanks to its ability to accommodate non-stop play, while monetizing downtime through side games and bets. While a human dealer must spend time shuffling, interacting with players, and consulting with colleagues, the Jackpot Blitz can accept wagers 100 per cent of the time, making sure gamblers get the action they came for and operators see a return on their investment.
Source: Jackpot Digital.
Beyond gaming revenue, casinos are further incentivized to onboard the Jackpot Blitz because of its fully customizable advertising functions, including logos, card backs, chips and felt colors, all of which bolster casino culture and enable the pursuit of revenue from third-party advertising partners.
The Blitz ties its value proposition together by generating automatic reports – including demographics and consumer behaviour through a rewards card system – and plugging directly into most back-end management systems, saving casinos the hassle of manual tracking, while also minimizing tampering, money-laundering and theft through the use of isolated servers.
Whether it’s streamlining the player experience or putting automation at the service of operators’ bottom lines, Jackpot Digital’s flagship product is positioned to create value, and plenty of it.
Jackpot Digital’s path to profitabilityAfter existing as an exclusively cruise-ship-based operation since 2015, Jackpot Digital suffered a steep decline in revenue during the COVID pandemic, falling from C$2.18 million in 2019 to C$0.42 million in 2021.
Management quickly pivoted in the face of uncertainty, redesigning the Blitz to execute on a land-based expansion strategy – backed by Gaming Labs International certification in fall 2023 – which is bringing about a successful turnaround after the re-emergence of the casino business. Revenue more than tripled to C$1.43 million in 2022, and reached C$1.57 million through three quarters of 2023, with the company expecting to ramp up significant recurring revenue after it installs several dozen machines currently in its backlog.
The Jackpot Blitz electronic gaming table in action. Source: Jackpot Digital.
The first installation of land-ready Jackpot Blitz machines is now completed at the Jackson Rancheria Casino in California, as the company announced today. The three-machine installation marks a new era of growth for the company, having announced 25 Blitz deals since November 2021 (slide 12), with many more across Canada and the United States in the works, in addition to a strong pipeline in Asia and Europe.
“Jackpot Digital could be a profitable company right now if it only focused on care and maintenance of the revenues it currently generates. But that’s not why we’re here,” Mathieu McDonald, Vice President of Corporate Development at Jackpot Digital, said in a recent interview with Stockhouse. “We intend to scale up to many multiples of the tables we have out right now, with the potential for up to 2,000 tables over the next three to five years.”
According to McDonald, the company is fielding three to five inquiries per week about the Blitz from casinos around the world that recognize the machines’ first-mover advantage in dealerless poker and potential expansion into other games in need of automation.
Jackpot Digital’s ambitious plan of action is supported by a management team of proven gambling, finance, advertising and legal professionals, many of which have been serving Jackpot stakeholders for more than two decades.
A long-tenured management teamThe management team behind Jackpot Digital is led by Jake Kalpakian, who has served as president and chief executive officer since 1999, including under the gambling technology stock’s former incarnation as Las Vegas From Home.com Entertainment Inc. Kalpakian brings more than 30 years of experience managing small-cap publicly listed companies, granting him a steady hand when it comes to maneuvering through the volatility of the economic cycle.
Kalpakian’s efforts are supported by three directors whose well-rounded expertise positions Jackpot Digital for long-term sustainable growth:
Gregory T. McFarlane, a director at Jackpot Digital since 1999, previously ran an independent advertising firm and holds a degree in mathematics from the University of Toronto. McFarlane is also a co-founder of the popular Control Your Cash personal finance website. Chief financial officer Neil Spellman, a director at the company since 2002, boasts an almost two-decade track record as vice president at Wall Street firm Smith Barney, where he developed a multi-industry understanding of the journey to profitability. Finally, Alan Artunian, a director since 2017, currently serves as CEO of Nice Guy Holdings, a corporate and legal consulting company advising clients across a diversity of sectors.Guided by a strategic management team, and benefiting from a macro-trend toward casino automation, Jackpot Digital is on course to ride a wave of millions of gamblers looking for an elegant, tech-informed alternative to traditional in-person play.
A multi-bagger opportunityThe Jackpot Digital opportunity sets up savvy investors who recognize the soundness of the company’s value proposition. The tremendous risk/reward value of Jackpot Digital gives investors the opportunity to ride the macro-trend toward casino automation, as deals for the Blitz keep pouring in, the company adds games to its portfolio, and the global casino industry adds hundreds of billions in revenue through this decade.
Join the discussion: Find out what everybody’s saying about this gambling technology stock on the Jackpot Digital Bullboard.
This is sponsored content issued on behalf of Jackpot Digital, please see full disclaimer here.
The post This gambling tech stock is future-proofing the world’s casinos appeared first on The Market Online Canada.
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