To The Moon

South Korean digital comics giant $WEBTOON Entertainment Inc.(WBTN)$ announced after the market closed on August 12th that it had entered into a multi-year strategic partnership with the $Walt Disney(DIS)$ . The partnership will adapt Marvel, Star Wars, 20th Century Fox, and classic Disney IPs into vertical strip comics, exclusively available on the Webtoon English client.

Spurred by this news, coupled with the company's better-than-expected second-quarter results, Webtoon's stock price surged 81% on Wednesday, its largest single-day gain since its IPO last year, and its trading volume set a new record. Trading volume for August-end call options with a strike price of $25 surged 50-fold in a single day, with even ridiculously high premiums attracting buyers.

"According to SEC filings, at the end of July, the CEO quietly purchased $5 million worth of call options in the $10-$12 range, with a strike price of $20 and an expiration date of January 2026. His paper profit has now exceeded 200%, and he posted an emoji of Spider-Man wearing sunglasses on X — "diamond hands."

How will the future play out? Let me speculate on three versions.

Sweet Story Version: Q3 users exceed 200 million, Disney announces that the prequel to "Avatar 3" will debut on $WEBTOON Entertainment Inc.(WBTN)$ , and the stock price will soar to $50.

Reality Version: Users arrive, but the paying rate is average, and the stock price will fluctuate between $20-$25, waiting for the original IP to monetize next year.

Reversal Version: Marvel fans dislike the vertical screen "lack of flair," growth stalls, and the stock price falls back to $10 — but at this point, the probability seems about the same as Thanos' resurrection.

How will it play out? Let's take a look at the fundamentals and analysts' perspectives:

1. Partnership Details: 100 official comics will be released in batches this year.

• Content Library: The initial batch includes "Spider-Man," "Avengers," "Star Wars," "Alien," and spin-off series. A total of 100 comics will be updated on a dedicated channel on Webtoon.

• Original Co-creation: The two parties will also co-produce new comic strips, adopting a mobile-first storytelling cadence, targeting Gen Z and younger global users.

• Technical Adaptation: Webtoon will rewrite all traditional horizontal storyboards into a vertical, continuous scrolling format, preserving the essence of the original works while enhancing mobile immersion.

2. Financial Highlights: Losses Significantly Narrowed, Revenue Exceeded Expectations

• Second-quarter revenue was US$348.3 million, an 8.5% year-on-year increase, or 5.5% at constant exchange rates, exceeding the upper limit of the company's previous guidance.

• Net loss was only US$3.9 million, a significant narrowing from US$76.6 million in the same period last year; adjusted EBITDA was US$9.7 million, marking two consecutive quarters of positive results.

• By business: All three segments, paid content, advertising, and IP adaptation, saw growth, with IP adaptation revenue surging 42.6% at constant exchange rates.

3. Market Reaction and Institutional Views

• Stock Performance: Following the announcement, Webtoon's stock price jumped over 40% in after-hours trading on Tuesday and continued to surge throughout Wednesday, closing up 81%.

• Analyst Interpretation: Morgan Stanley noted that this partnership is expected to significantly expand Webtoon's user base in the English-language market, but long-term interest in Disney fans remaining and consuming the platform's native content remains to be seen.

• Risk Warning: Despite the short-term surge, Webtoon's current stock price remains below its IPO price of $21 last year, following a cumulative decline of over 50% due to consecutive performance misses.

4. Strategic Significance: IP Breakthrough and Globalization

• Daniel Fink, Head of Disney Digital Innovation, said, "Leveraging Webtoon's vertical screen technology and 155 million monthly active users worldwide, we hope to continue the vitality of classic stories in a new digital format."

• Yongsoo Kim, Webtoon's Head of Global Strategy, stated that this collaboration not only expands the platform's portfolio of top IPs but also provides more sources for adaptations in subsequent film and television development.

• Looking ahead to the third quarter, Webtoon expects revenue of $380-390 million, a year-on-year increase of 9.4-12.2%. However, management emphasized that the Disney partnership will not bring additional financial contributions in the short term, and its value will be gradually realized over the next few years.

5. Analysts are starting to paint a rosy picture, with target prices ranging from $12 to $35.

• $Morgan Stanley(MS)$ : Maintain "Overweight" rating, with target price increased from $15 to $28 – "Fan economy + short series adaptations, Webtoon = the prototype of the next $Netflix(NFLX)$ ."

• $Goldman Sachs(GS)$ is even more bold: In a bull market scenario, the target is $45, based on the logic that "for every 10 million new Marvel fans, ARPU triples."

• A retail investor on Reddit photoshopped the WBTN logo onto Iron Man's chest, captioning it "$100 is not a dream."

What do you think?