Jim Cramer Says Disney Stock A Bargain After PENN Deal: 'Bet Against Disney And Send Me An Invitation To Your Funeral'

Zinger Key Points
  • Disney stock has been a laggard this year, rising only 1.44% so far compared to the S&P 500’s 17.2% jump.
  • The company is facing several fundamental challenges such as cord cutting, competitive streaming business and reduced theme part attendance.

Walt Disney Co. DIS marked its foray into online sports betting as its ESPN unit stitched up a partnership with PENN Entertainment, Inc. PENN to launch ESPN Bet in the fall of 2023 in the 16 legalized betting states.

What Happened: CNBC Mad Money host Jim Cramer is excited about the partnership. “This Disney move is brilliant because you can have all of your fantasy and your fantasy PennNat lineups on the same page…No more toggling!!!” he said in a post on X on Tuesday.

He followed it up with more thoughts on the deal on Wednesday. "This deal is huge and I think the beginning of a revenue stream that can make Disney's stock a bargain," he said.

The stock picker said his trust currently owns Disney stock but it has been a "huge bust," he said. The entertainment giant’s shares have never really taken off even amid the broader market rally seen this year.

The stock is up only 1.44% so far in 2023 compared to the S&P 500's 17.2% jump. Not-so-robust theme park attendance and competition in the streaming segment are all weighing down on the stock. More importantly, the company has also had a run-in with Florida Governor and presidential hopeful Ron DeSantis, and the two parties are locked in a legal fight.

Cramer said, “But at this point, I say you bet against Disney and send me an invitation to your funeral.”

See Also: Best Media Diversified Stocks

Why It's Important: The ESPN Bet launch will likely give Disney another revenue stream to mitigate the weakness seen in the traditional TV business. As Penn gets the exclusive rights to the ESPN trademark in the U.S. for the next 10 years, with the option to extend it for another 10 years, the former will pay the latter $1.5 billion in cash over the period.

ESPN also gets about $500 million worth of warrants to purchase about 31.8 million PENN common stock over the agreement period.

Disney, therefore, stands to receive the much-needed cash at a time it is planning to buy out the remaining stake in Hulu it does not already own.

In premarket trading on Wednesday, Disney shares rose 0.79% to $88.83 and PENN gained 12.96% to $28.06, according to Benzinga Pro data.

Read Next: Disney Q3 Earnings Preview: Disney+ Subscribers, ‘Indiana Jones’ And Other Box Office Disappointments, More Key Items To Watch

Photo: Courtesy of Scott Beale on Flickr

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Posted In: Analyst ColorEntertainmentEquitiesNewsSports BettingTop StoriesExpert IdeasJim Cramer
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...