Disney stake fuels 28% surge for this entertainment stock

Jacob Wolinsky ValueWalk

It is up more than 100% in just over a month.

Webtoon Entertainment (NASDAQ:WBTN) came across many investors’ radars a little more than a month ago when the web comics platform announced that it was collaborating with media giant Walt Disney (NYSE:DIS).

This week, Disney deepened its relationship with Webtoon, buying a 2% stake in the company and partnering with Webtoon to create a new digital platform for comics.

Webtoon already has its own industry leading digital comics platform. The collaboration announced last month would allow Disney and its properties, including Star Wars, Marvel, Disney, and others, to be on it.

But this new agreement would make Disney a 2% equity partner. It also involves creating new platform for digital comics, old and new.

“With a new platform that will combine our product and technical expertise with Disney’s full comic catalog, we’re giving new and longtime fans all over the world a new way to discover these legendary characters and stories,” Junkoo Kim, founder and CEO of Webtoon Entertainment, said.

Marvel-ous deal

As part of this new deal, more than 35,000 comics from Marvel, Star Wars, Disney, Pixar, and 20th Century Studios will be available in a single digital comics platform with a subscription.

It also expands upon Disney’s current Marvel Unlimited digital comics subscription service. This new platform will be built and operated by Webtoon, providing decades of Marvel comics for current Marvel Unlimited subscribers and new subscribers. The new platform will include a mix of formats – both vertical and traditional. It will also feature old or archived comics, current comics, and new, original stories.

Further, as a perk, Disney+ subscribers will be able to access the Webtoon platform at no additional charge.

“Through our expanded relationship with Webtoon, the global leader in digital comics, we’re opening doors to new audiences and deepening fan engagement,” Josh D’Amaro, chairman, Disney Experiences, said.

Analysts are bullish on the partnership

Webtoon got a slew of price target upgrades on this news, including JP Morgan. Analysts at JP Morgan see this as a significant step up in scale for Webtoon from the previous announcement, according to the Fly.

Deustche Bank boosted its price target to $25 per share, while Citigroup lifted it from $12 to $30 per share.

If it reaches $25 per share, that would be 27% higher than the current price. If it hits $30 per share, that would represent a 52% return over current levels in the next 12 months.

Webtoon stock is already up 41% YTD and 73% over the past 12 months. The company has not yet turned a profit, but its price-to-sales ratio is low at just 1.41 suggesting its price is still fairly reasonable in relation to its revenue.

Author

Jacob Wolinsky

ValueWalk

Jacob Wolinsky is the founder of ValueWalk, a popular investment site. Prior to founding ValueWalk, Jacob worked as an equity analyst for value research firm and as a freelance writer. He lives in Passaic New Jersey with his wife and four children.

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