Webtoon Stock Surges 81% on Disney Partnership, Earnings Beat

Webtoon Entertainment Inc. (WBTN.US) saw its stock price soar by 81% on Wednesday, marking its largest single-day increase since its initial public offering last year. This surge came after the company announced a strategic partnership with The Walt Disney Company (DIS.US), which will introduce iconic Marvel and Star Wars characters, such as Spider-Man and Luke Skywalker, to the Webtoon platform.

The collaboration, detailed in a statement released after Tuesday's market close, involves Webtoon integrating 100 adapted comics from Disney's portfolio into an exclusive section of its English-language application. Additionally, the two companies will collaborate on creating original webcomics. This partnership aims to enhance Webtoon's content offerings, which are predominantly in the anime style, and provide Disney with a new avenue to reach younger audiences, particularly Generation Z and beyond.

Webtoon's quarterly earnings report, released concurrently, also contributed to the stock's upward momentum. The company reported an adjusted earnings per share of $0.07 and revenue of $3.48 billion, surpassing analysts' expectations. The average forecast for the second quarter was an earnings per share of approximately $0.02 and revenue close to $3.41 billion.

Despite the positive news, specific financial terms and the launch date of the collaboration remain undetermined. Webtoon's CEO, David Lee, emphasized the mutual benefits of the partnership, stating that Webtoon would enrich its content library with popular works, while Disney would gain access to a new demographic through the mobile platform. Yongsoo Kim, Webtoon's Chief Strategy Officer and Head of Global Business, highlighted the partnership's potential to introduce legendary stories to a new generation of mobile-native comic enthusiasts and offer existing fans a fresh way to engage with their favorite series and characters.

Webtoon has been actively expanding its partnerships, collaborating with other major entertainment companies. In addition to Disney, Webtoon has partnered with HYBE, a Korean entertainment company, and DC Comics, a subsidiary of Warner Bros. Discovery. These collaborations underscore Webtoon's strategy to diversify its content offerings and attract a broader audience.

The stock's significant rise, however, does not fully offset the impact of previous underperforming quarters. The current stock price remains below the $21 initial public offering price from last year. The Disney partnership is viewed as a strategic move that could accelerate user growth in the English-language market. However, the success of this initiative hinges on whether Disney's audience will engage with original content on the Webtoon platform or merely visit for familiar brand content.