Disney’s Stock Takes a Hit Due to Warnings on Parks Division

Shares of Disney dropped nearly 4% on Wednesday after the company expressed concerns about its theme parks division during its quarterly earnings call. This brings the stock to its lowest point in 2024, at just above $86.

Despite reporting profits and revenue that exceeded analyst predictions, Disney’s management pointed to signs of a weakening consumer, which added to the market’s worries about a potential global economic slowdown.

The company noted a slowdown in demand within its Experiences unit, which includes theme parks and represents about 52% of Disney’s global operating profit for the last quarter. CEO Bob Iger mentioned that lower-income consumers appear to be tightening their spending.

Other companies also faced stock declines on Wednesday, such as Airbnb, Amgen, Lyft, and Super Micro Computer, reflecting a broader trend on Wall Street.

<pAnalysts like Jonathan Kees from Daiwa still had a "positive impression" of Disney’s results, despite the market reacting negatively to the demand concerns.

<pDisney's stock performance has been concerning over the years, with its current price similar to what it was a decade ago. While the S&P 500 has increased significantly, Disney's returns have lagged behind, even under Iger’s recent leadership.

<pHowever, there is still some optimism among analysts. They have set an average price target of $122 for the stock, suggesting a potential for growth. But, a recent drop in confidence has seen Disney trading at its lowest price-to-earnings ratio since 2020, signaling investors are unsure about its future.

<pIn a related development, Disney announced price hikes for its streaming services, effective October 17. Basic plans for Disney+ and Hulu will increase, along with prices for their bundles.

<pDisney reported adjusted earnings of $1.39 per share, outpacing analysts’ expectations. Revenue also came in above estimates at $23.16 billion.

<pThe company noted its streaming services are now profitable, and it aims to improve streaming margins in the coming years.

<pHowever, the forecast for the Experiences business remains cautious, with expected operating income declines due to softened domestic demand. Additionally, international traffic has been affected by the upcoming Olympics and other global factors.

<pDespite the challenges, Disney recently celebrated the success of the new 'Deadpool' movie, which has set records for R-rated films. The company also secured an important media rights extension with the NBA, which will further shape its broadcasting strategy.