Disney: eSports Crushes the Mouse

Written by Nick Hodge
Posted May 13, 2020

Disney is now losing one billion dollars per month. 

This was the stock that all the old guard Wall Street bros loved a few months ago — when the plebes were still willing to part with their precious dollars to watch unoriginal and trite comic book rehashes. 

Disney Stock 2020

All Disney — that stalwart of stalwarts — has done is lose a third of its value since it peaked in early December last year. 

No one is going to Disney movies. No one is going on Disney cruises. No one is going to Disney theme parks. 

But… but… Disney+ is crushing it. Cool, bro. Disney is still losing One. Billion. Dollars. Per month. 

But… but... Shanghai Disneyland is already open. Yes, yes it is. At 30% capacity. And its other parks will have that same throttled capacity when they open back up. Oh, and the company is still losing a billion dollars per month. 

I know money and numbers don’t matter to some people anymore. A trillion in stimulus here. Losing a billion every month there. 

But the chickens are already coming home to roost in the beams of empty retail. 

Neiman Marcus… bankrupt.

J. Crew… bankrupt.

Pier 1… bankrupt. 

Modell’s Sporting Goods… bankrupt. 

And on the days the stock market goes up… there is lighter volume. On the days it goes down… there is heavier volume. 

Markets are changing. The world is changing. 

Take Modell’s for example. It was always good for being the underdog sporting goods retailer — the Avis of its sector. 

But with youth team sports on a multi-year skid, it finally bowed out. It likely wouldn’t have survived the pandemic anyway, given there are no sports leagues — youth or professional — currently open. 

Indeed, the share of children ages 6 to 12 who play a team sport on a regular basis declined from 41.5% in 2011 to 37% in 2017. 

Go back a bit further and the numbers are more grim. Since 2008, youth participation in baseball is down 20%. 

Some youth football leagues are folding because they can’t get insurance because of brain injury risk. 

Where are the kids — and the money — going?

eSports

Here is a chart of Nintendo stock versus Wall-Street-favorite Disney over the past year. 

Disney and Nintendo eSports Stock

Not only was Nintendo handily outperforming Disney before the virus… Mario has booped the mouse on the head since everyone was locked inside. 

Nintendo sales were up 34% in Q1 and its big hit — Animal Crossing: New Horizons — sold over 11 million units in the first three months of the year. 

Imagine sales with everyone inside with nothing else to do?

And it’s not just Nintendo. 

And it’s not just the virus. 

Like corporate earnings were slowing before anyone knew where Wuhan was, eSports were taking off before there was any pandemic. 

Billionaires are buying eSports teams just like NFL and MLB franchises. Teams and players are earning millions of dollars — more than traditional athletes in many cases. 

And the related stocks are taking off as well. 

They were some of the best-performing stocks before the outbreak… and now during it… and I expect will be after it as well. 

Like we were the first to bring you inside the cannabis space… we are going to be the first to bring you inside this space as well. 

I know a lot of people claim now that they were early to cannabis, that they were contrarian. Anyone can write stories. 

We were literally the first financial newsletter to go inside Canopy Growth with a video camera and bring the story to retail investors. We have the footage and the 3,000% gains to prove it. 

And we’re about to do it again with video games. 

It’s game on for eSports. 

Call it like you see it,

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Nick Hodge

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Nick is the founder and president of the Outsider Club, and the investment director of the thousands-strong stock advisories, Early Advantage and Wall Street's Underground Profits. He also heads Nick’s Notebook, a private placement and alert service that has raised tens of millions of dollars of investment capital for resource, energy, cannabis, and medical technology companies. Co-author of two best-selling investment books, including Energy Investing for Dummies, his insights have been shared on news programs and in magazines and newspapers around the world. For more on Nick, take a look at his editor's page.

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