With this deal, Disney will put its comics on the Webtoon webcomics platform.
The top performing stock on the market was webcomics company Webtoon Entertainment (NASDAQ:WBTN), which soared 86% on Wednesday after releasing its second quarter earnings.
But the primary catalyst for the stock was not the earnings, although they were solid. Instead, it was a deal the online platform for comics struck with media giant Walt Disney (NYSE:DIS).
The multi-year partnership with Disney will bring Disney’s voluminous library of comics to the Webtoon platform, including comics from Disney, Marvel, 20th Century Studios, and Star Warsbrands to Webtoon’s mobile vertical-scroll format. The platform allows fans to read their favorite comics online anytime.
More than 100 Disney comics will be brought to Webtoon, starting with the Amazing Spider-Man, the Avengers, Star Wars, Alien, and Disney As Old As Time: A Twisted Tale.
“The Disney, Marvel, 20th Century, and Star Wars brands are among the most legendary, creative, and successful in the industry,” Yongsoo Kim, chief strategy officer and head of Global Webtoon, said. “We’re thrilled to kick off this collaboration with iconic series from their comic book catalog – and this is just the start! Together, we’re bringing this legendary storytelling to a new generation of mobile-native comic fans, while giving existing fans a new way to experience series and characters they love.”
Partnership will also yield new Disney comics
The partnership will not only bring reformatted Disney comics to Webtoon, but it will also involve the creation of new, original webcomics from the Disney, Marvel, 20th Century Studios, and Star Wars brands.
“Our collaboration with Webtoon will allow us to expand our beloved franchise universes on a best-in-class digital platform,” Daniel Fink, head of digital innovation, Disney Consumer Products, said. “We look forward to engaging with their dedicated, global user base while welcoming future fans to experience a redefined form of Disney storytelling that will have a lasting impact in the digital comics space.”
Q2 earnings beat
The partnership should provide an additional revenue opportunity for Webtoon, which posted strong Q2 results. The company saw revenue grow 8.5% in Q2 to $348 million. This beat estimates of $341 million.
It had a net loss of only $3.9 million, which was a vast improvement over the $76.6 million net loss in the same quarter a year ago. The improved profitability was due mainly to lower general and administrative expenses, but the prior year quarter had elevated one-time expenses due to the initial public offering (IPO) that took place that quarter.
Adjusted EBITDA was $9.7 million, down from $20.4 million in the prior year, while adjusted earnings were 7 cents per share compared to 18 cents EPS in the prior year. But the 7 cents EPS blew away estimates of -17 cents per share.
Also, the company expects revenue to grow between 9.4% and 12.2% in the third quarter to a range of $380 million to $390 million. Adjusted EBITDA is targeted to reach $2.0 million to $7.0 million in Q3.
Morgan Stanley raised Webtoon’s price target to $11 per share on the news, but the stock blew well past that.
The good news is, Webtoon is nearing profitability, and it is cheap, with a price-to-sales ratio of 0.90 – which suggests a good value.
