The Walt Disney Company is one of the most iconic brands in American history. Beyond the colorful chaos of the studio’s animation and theme parks lies a solid foundation for investors. Understanding how Disney rose to prominence should make you more comfortable in deciding whether or not investing in Disney stock makes sense for you.
A Man, A Mouse, and A Dream
Walt Disney, the company’s founder, was born in Chicago in 1901. At the age of 14, he took a rapidly developing love of drawing on the road and enrolled at the Kansas City Art Institute. After a stint with the Red Cross and a failed company in Kansas City, Walt Disney joined his brother Roy O. Disney in Hollywood in a second attempt at the animation industry.
The brothers were toiling away for little profit due to the copyright on characters they were animating, so Walt decided to take matters into his own hands by creating new animated characters. His creation was a precocious little scamp named Mickey Mouse. Maybe you’ve heard of him.
After two unremarkable films, Disney decided to add sound to the third Mickey Mouse feature dubbed “Steamboat Willie.” Once this appeal of this technological breakthrough became apparent, Walt Disney became a giant in entertainment generally and animation in particular.
The Disney Brand Emerges
Feeding off of the financial success of Mickey Mouse, Disney was able to produce feature-length animated pictures such as Snow White and the Seven Dwarfs, Bambi, Pinocchio, and Fantasia. Walt Disney was a critical and commercial success, and the profits began to roll in.
Disney then moved to conquer television in the 1950’s, with great success. By combining live action projects with well-known animation characters, Walt Disney began to develop a family-friendly brand that could take on any number of shapes and forms. This brand loyalty would be crucial to Disney’s next, and perhaps most ambitious step, creating the best theme parks in the entire world.
On December 15, 1966, Walt Disney died of lung cancer, and much of the signature Disney magic began to fade away as fans or critics did not nearly as well receive newer projects. The company experienced a resurgence in the 1990’s with a slew of new animated hit movies and the purchase of expanded content such as ESPN, ABC, and Pixar. The aggressive content acquisition strategy continues with purchase of Marvel and Star Wars, positioning Disney as an entertainment juggernaut for the foreseeable future.
A History of Disney Stock
The Walt Disney Co. has been a publicly traded company since 1957. Disney stock has enjoyed remarkable performance since then, enjoying strong and healthy dividends and splitting numerous times.
In 1940, Walt Disney Productions issued its first stock using 6% cumulative convertible preferred shares. Disney’s stock went public on November 12, 1957, with an initial public offering at the price of $13.88 a share. Previously, the stock had been jointly held by the Disney family and other partners. Disney is one of the 30 stocks in the Dow Jones industrial average.
Disney’s common stock traded over the counter (OTC) from 1940 until its initial public offering on the New York Stock Exchange in 1957. Those who purchased common stock over the counter before the initial public offering would have seen substantially higher returns. Disney stock traded for $3 per share in 1949 and rocketed to $52 per share before its first split at two for one. Disney began to pay common stock dividends in 1956 and has traditionally paid an annual dividend to shareholders each January.
At the time of its initial public offering in 1957, Disney sold each share for $13.88. If you had invested $1,000 at the time, you would have been able to purchase 72 full shares. With six stock splits in company history, your original 72 shares of Disney would equal a staggering 27,648 shares today.
Disney stock has split seven times: in 1956, 1967, 1971, 1972, 1986, 1992 and 1998. The 1998 split was a 3-for-1 split. The splits in 1986 and 1992 were 4-for-1. The others were all 2-for-1. On June 15, 2018, Disney stock closed at $108.85 a share, making your initial $1,000 investment worth $3 million today.
The Happiest Stock Certificate on Earth
Because of the entertainment-related nature of the company, Disney stock certificates became extremely popular with investors and collectors alike. Unlike traditional stock certificates, Disney stock certificates feature pictures of Mickey Mouse, Donald Duck, Tinkerbell, and a menagerie of other famous Disney characters. Single shares were often gifted to children as a way to learn about the stock market.
But in October 2013, Disney announced they would be discontinuing paper stock certificates, a move that generated profound disappointment among Disney fans worldwide. Instead of stock certificates, Disney announced they would instead issue Certificates of Acquisition upon request; however, those certificates have no cash value.
Disney fanatics should take heart in the fact that there are ways to purchase and enjoy Disney stock in a smart, contemporary style. Companies like Stockpile give you the ability to buy stock in companies like Disney using their gift card program. You can even purchase fractional shares of stock, allowing you to give someone a Disney keepsake on any budget. And using the Stockpile app, you can make additional purchases or manage your portfolio.
You may not be able to afford to buy whole shares of Disney to give as a gift, but by automatically purchasing fractional shares based on your budget, you will be able to put a smile on the face of someone you love by giving them real Disney stock in a fun and innovative way.