MVL: Enormous Value in Content

Marvel is worth having at least one or two percent in your portfolio. The comic giant is owner of some of the most popular cartoon/comic-book characters of all time. The company's annual report mentions a deep, deep pool of 5,000 characters to tap into over time. Marvel can grow cash flows for a very long time. How much is that worth? I have no idea. Walt Disney Co. has some very valuable content and DIS has a market cap of $65 BILLION. Of course, DIS also has other sources of revenue, such as theme parks and television networks. Still, $2.5 billion vs. $65 billion shows a pretty good discrepancy and a lot of potential upside in MVL. The market is currently estimating the discounted future cash flows of MVL to be worth about $2.5 billion (current market cap). I think that might be a good, conservative approximation of the terminal value of MVL. In other words, the market is not discounting any extra growth over the next 10-20 years as the company begins producing its movies in-house - gaining more upside in the process - as well as the option value that exists in the deep library of character content mentioned above. In the past, the company licensed its content which limited downside but also limited upside from box office receipts. Given the popularity of its character library, I expect the downside to remain low and the company to gain a lot more cash flow as MVL begins producing its own movies. My $60 target price is loosely based on expected cash flows and a multiple of 30x.