Disney’s Net Worth Increased By $2 Billion After Release Of New Star Wars Trailer

"Chewie, we're rich."

Cheiwie Solo

After the new trailer for Star Wars: The Force Awakens was released on Friday, Disney’s stock price skyrocketed:

A group of analysts who got a 20-minute preview of “Star Wars” a few weeks before the film’s 1977 release were impressed with what they saw, according to Hal Vogel, an independent media analyst who was there.

“Nobody really knew what ‘Star Wars’ was in 1977,” he said in an interview with CBS MoneyWatch. “We knew that it was going to do well. We didn’t know how well.”

Indeed, the first installment of George Lucas’ galactic soap opera has grossed more than $1.1 billion in inflation-adjusted terms, according to Box Office Mojo. Analysts expect history to repeat itself when the latest installment in the franchise, “Star Wars: Episode VII — The Force Awakens,” is released in December.

Keith Simanton, the managing editor of IMDB.com, expects the film to gross $225 million during its opening weekend, breaking a record held since 2012 by “Marvel’s the Avengers.” He estimates it will earn $1.8 billion altogether, the biggest total in history behind “Avatar” and “Titanic.” Ray Subers at BoxOfficeMojo isn’t quite as bullish, expecting a $125 million to $150 million opening weekend and a total gross of $1.2 billion to $1.4 billion.

“I haven’t heard the buzz that I have heard for “The Force Awakens” for a very long time,” Simanton said in an interview.

(…)

Wall Street was thrilled by the reaction to the film, the first to be released since Disney acquired “Star Wars” creator George Lucas’s LucasFilm for $4 billion in 2012. Disney has already felt the impact, getting a roughly $2 billion boost to its market capitalization on Thursday following the release of the “The Force Awakens” trailer at the Anaheim event.

In a recent note to clients, Nomura analyst Anthony DiClemente raised his price target on Disney stock from $110 to $120, noting the potential gains the company may reap from “The Force Awakens.” The shares closed on Friday at $106.69, down $1.41 (1.3 percent) amid the end-of-week meltdown on Wall Street.

Walt Disney, whose other properties include ABC and ESPN, estimates the new file will the company to report earnings per share 6 percent to 11 percent higher than it originally expected.

That’s just a short-term bump, of course. A better measure can be found in Disney’s stock price over the long term. In October 2012 when the Lucasfilm deal was announced, Disney shares were selling at roughly $50 a share. They are now well over $100 a share. Obviously, the Lucasfilm purchase isn’t solely responsible for that increase, Disney has had a number of box office successes in recent years and the Marvel acquisition has certainly benefited the company’s bottom line over the past six years. Nonetheless, Friday’s price jump is an indication that investors are pretty happy with Star Wars being brought into Disney fold. Given what can only be described as an overwhelmingly positive reaction from fans, as well as a ton of free publicity generated by the trailer’s release, it’s clear that they have every reason to be happy.

Between actual ticket sales, merchandising, and all of the other potential avenues of revenue, Star Wars will likely be a huge cash cow for Disney for years to come. Multiply that by three new movies in the trilogy, plus at least three movies that aren’t part of the original trilogy that will be released in off years starting in 2016, and we’re  talking about billions of dollars over the next decade at least. If this new trilogy is a success, one can easily see Disney continuing the franchise as long as they can, and as long as the fans continue buying tickets and merchandise and going to the inevitable theme park attractions. At that rate, it likely won’t be long before Disney has made back that $4,000,000,000 purchase price, only about half of which was actually in cash. Indeed, even before the money has really started rolling in, that $4,000,000,000 purchase price that Disney paid for Lucasfilm is looking like a heck of a bargain.

FILED UNDER: Economics and Business, Entertainment, Popular Culture, , ,
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. anjin-san says:

    He probably does not need the money, but a substantial bonus to Harrison Ford would be a class move.

  2. PJ says:

    Keith Simanton, the managing editor of IMDB.com, expects the film to gross $225 million during its opening weekend, breaking a record held since 2012 by “Marvel’s the Avengers.” He estimates it will earn $1.8 billion altogether, the biggest total in history behind “Avatar” and “Titanic.” Ray Subers at BoxOfficeMojo isn’t quite as bullish, expecting a $125 million to $150 million opening weekend and a total gross of $1.2 billion to $1.4 billion.

    Rant on.

    Domestically, Gone with the Wind is only the 156th highest grossing movie.
    That is if you don’t adjust for inflation, if you do, then it’s number 1.

    Avatar is the highest grossing movie domestically, if you don’t adjust.
    If you do, it’s number 14.

    Unadjusted box office rankings are as stupid as counting people in an age group having jobs instead of counting the percentage of people in that age group having jobs (and thus adjusting for population changes).

    Rant off.

  3. James Pearce says:

    Between actual ticket sales, merchandising, and all of the other potential avenues of revenue, Star Wars will likely be a huge cash cow for Disney for years to come.

    Even accepting how much of a cash cow Star Wars is likely to be, what this number actually reflects is the belief in Disney’s competence to run the franchise. If Sony or some other company had won the rights, I don’t think we’d see their coffers fill so quickly.

  4. Tyrell says:

    They are still raking in the money from “Frozen”. You can’t go anywhere without seeing some kind of “Frozen” merchandise, even convenience stores.

  5. C. Clavin says:

    @anjin-san:
    Well he just crashed one of his planes…so a little cash right now won’t hurt.