What Happened?
Shares of digital storytelling platform WEBTOON (NASDAQ: WBTN) jumped 80.6% in the afternoon session after the company announced a strategic partnership with Disney and reported better-than-expected second-quarter results.
The online comic platform announced a major multi-year partnership with Disney to bring approximately 100 titles from iconic brands like Marvel, Star Wars, and 20th Century Studios to its vertical-scroll app. This deal is expected to significantly boost Webtoon's content library and engage its global user base.
Adding to the bullish sentiment, the company also reported strong second-quarter financial results, posting a surprise profit of $0.07 per share, where analysts had anticipated a loss. Revenue also beat expectations, rising 8.5% year-over-year to $348.3 million. In response to the news, analysts at firms like Evercore ISI and Goldman Sachs raised their price targets on the stock, signaling confidence in the company's growth trajectory following the Disney partnership.
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What Is The Market Telling Us
WEBTOON’s shares are extremely volatile and have had 37 moves greater than 5% over the last year. But moves this big are rare even for WEBTOON and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 1 day ago when the stock gained 3% on the news that a key inflation report met expectations, bolstering hopes for a Federal Reserve interest rate cut, while a separate report indicated rising optimism among small businesses. The July Consumer Price Index (CPI) report showed annual inflation holding steady at 2.7%, aligning with forecasts and increasing the probability of a Federal Reserve interest rate cut to over 94%. Lower interest rates can stimulate the economy by making it cheaper for businesses to borrow and invest. Further boosting confidence, the National Federation of Independent Business (NFIB) Small Business Optimism Index rose to a five-month high. This is a crucial indicator for the Business Services sector, as many of its companies cater to small and medium-sized enterprises. The combined positive data fueled a broad, "risk-on" sentiment, where investors favor economically sensitive sectors, leading to gains across IT services, staffing, and manufacturing.
WEBTOON is up 20.6% since the beginning of the year, and at $16.40 per share, has set a new 52-week high. Investors who bought $1,000 worth of WEBTOON’s shares at the IPO in June 2024 would now be looking at an investment worth $712.61.
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