Webtoon Entertainment Inc. signage during the initial public offering event outside the Nasdaq MarketSite in New York, US, on Thursday, June 27, 2024.
Michael Nagle | Bloomberg | Getty Images
Webtoon Entertainment shares surged on Tuesday after signing a deal to create a digital comic platform for Disney, and agreeing to sell the media conglomerate a 2% equity stake.
Webtoon briefly jumped more than 36% in early trading, reaching a new 52-week high and on track for its second-largest one-day advance since going public last year.
Webtoon Entertainment, 1-day
Disney and Webtoon agreed Monday to create a digital platform for the studio's Marvel and Star Wars brands. More than 35,000 comics tied to Disney properties — including Pixar and 20th Century Studios — will be available on one service with a single subscription for the first time, the companies said.
A ‘preferred destination'
Deutsche Bank analyst Benjamin Black described Monday's deal as a “material expansion” from a partnership first announced in August. Disney can help diversify Webtoon's revenue by creating a steady stream of recurring income.
The deal may also help boost interest from other intellectual property (IP) owners looking to follow Disney's lead, Block said.
“The new agreement further validates Webtoon's platform as the preferred destination for major IP distribution,” Black wrote to clients.
Morgan Stanley analyst Matthew Cost was skeptical of the immediate impact of the deal on Webtoon's near-term earnings. In fact, he pointed to the need to invest in order to build out the new platform.
One of Webtoon's goals is to expand its English-speaking user base, the largest revenue opportunity for the company, Cost said.
Including Tuesday's rally, Webtoon shares have now more than doubled in the past three months.
