The Walt Disney Co. (NYSE:DIS) is all set to launch its ESPN sports betting app in November. As per a Wall Street Journal report, Disney’s partnership with gambling company Penn Entertainment (NASDAQ:PENN) is bearing fruit, with the company ready to take its 10-year deal to the next level. Sports and betting enthusiasts will be able to bet on their favorite sports games on mobile phones via a new app called ESPN Bet. Penn will provide the sportsbook and related infrastructure for betting.
Under the deal, Penn will pay $1.5 billion in cash and grant another $500 million in warrants to ESPN over ten years. Since the pandemic-driven shift to online streaming and the cord-cutting of traditional TV channels, Disney’s management has been looking to enter the lucrative sports betting space. After several failed attempts to partner with leading casino and sports gambling companies like DraftKings (NASDAQ:DKNG), ESPN found a suitable partner in Penn.
Disney’s Tryst with Sports Betting
Disney’s top tier was earlier reluctant to enter the betting arena as they thought it would tarnish the entertainment giant’s image. However, industrial circumstances and the attraction of younger audiences toward betting compelled the company to change its stance. A Supreme Court ruling in 2018 that legalized sports betting in 38 states and the District of Columbia has boosted the sector even more.
Penn is an American casino company and operator of integrated entertainment, sports content, and casino gaming. At its end, Penn knew that the ESPN Bet collaboration could help it to win a major share of the sports betting arena, given that ESPN is already a much-loved sports channel with a huge fanbase.
Media companies are already performing poorly amid the shifting entertainment industry trends and the ongoing strike by the Screen Actors Guild (SAG) against Hollywood Studios. Plus, Disney has its own set of challenges, including activist investor Nelson Peltz’s renewed efforts toward securing board seats at the company. Disney also raised the prices at its Disneyland and Walt Disney World theme parks in California and Florida, respectively.
What is the Price Target for DIS Stock?
Of the 11 Top Analysts who recently rated DIS stock, eight have given it a Buy rating, while three have given it a Hold rating. Top Wall Street analysts are those awarded higher stars by the TipRanks Star Ranking System. This is based on an analyst’s success rate, average return per rating, and statistical significance (number of ratings).
Based on these ratings, Disney has a Moderate Buy consensus rating. Also, the average Walt Disney price target of $109.20 implies 29.5% upside potential from current levels. Year-to-date, DIS stock has lost 5.2%.
