It’s rare, even in this day and age, to find a person who doesn’t love Disney DIS to some degree.
Lately, the company has dealt with its fair share of controversy and negative headlines, most recently regarding the live action film Mulan.
But still, for many, Disney movies are part of growing up – a reminder of a time of innocence and believing in magic and fairies.
And then the pandemic hit, and Disney’s world turned into something far from magical.
Theme parks around the world ceased operations, canceling tickets and reservations until future dates unknown. The Disney Cruise Line docked their boats until further notice. New movies and shows slated for release were suddenly up in the air with neither plan nor hope of coming to a theater near you.
And through all of this, their stock prices tumbled more than 40%, finally bottoming out in mid-March.
Closing Doors ’Round the World
In compliance with local ordinances, Disney parks shuttered around the world between January and March – first in China and Hong Kong, and then throughout Europe and the United States. Some of their locales, such as Disneyland Shanghai, were able to open as soon as May.
Others, like Disneyland Hong Kong, delayed reopening until June and soon had to close down again due to tightening local restrictions.
Many of these locations – as well as parks in Belgium, Germany, Italy, and France – have been forced to close their doors once more in the past two weeks as coronavirus cases spread throughout Europe again. Although they have hopes to reopen in the latter half of December for peak winter tourist season, there are no guarantees.
And some, like Disneyland in Anaheim, California, have yet to open doors to the public since March.
As a result, Disney announced a round of layoffs in late September: 28,000 theme park jobs to be slashed over the next month. The company largely laid the blame on the state of California, stating that pandemic uncertainties were “exacerbated” by the state’s “unwillingness to lift restrictions” so they could reopen.
What’s a Polka-Dot Wearing Mouse to Do?
If you go simply by theme park closures, Disney appears to be in a world of trouble.
But, unlike many other media giants, they had a generous fallback option: the Disney Vault, jammed full of movies, shows, and shorts adored by audiences for over half a century.
Disney capitalized on its vault with its latest digital offering, Disney+. The company partnered with Verizon VZ to offer the service free at launch to entice users to join. Hordes more flocked in as governments shuttered entire cities, states, and countries to curb the spread of the coronavirus.
The company’s subscription numbers also received a boost due to its acquisition of and expansion upon the Star Wars universe with “The Mandalorian.” In fact, Wall Street analysts widely agree that its latest addition to the Star Wars universe was a huge driver of paid traffic in the first two quarters of the year.
Disney appears to be banking on “The Mandalorian” once more, as the show’s second season is set to premiere less than two weeks before its deal with Verizon expires. The company hopes that if new offerings such as Mulan – or upcoming December releases such as “Soul” – are not enough to keep users around for a second year, the hype around the Star Wars universe will.
The company also hopes to capitalize on Netflix’s NFLX announcement that its subscription costs will increase. The standard price will see an increase of $1 to $14 per month, while the premium price is set to increase $2 to $18 per month, compared to Disney+’s $6.99 per month offering.
What Does All of This Have to Do with Disney’s Stock?
All of these factors contribute to the current state of Disney’s stock prices. But, weeding through every factor of the massive media company’s financial reports is a time-consuming process.
That’s why Q.ai’s deep learning AI (artificial intelligence) is here to help. We provide an in-depth look at a company – and its financials – so you don’t have to do the digging yourself.
Without further ado, let’s take a look at another facet of Disney’s investment-worthiness.
Walt Disney Co (DIS) by the Numbers
Walt Disney Co closed up almost 2.6% on Thursday, ending the day at $121.54 on volume well over 8.5 million shares. Thursday’s numbers mark a slight decrease from October’s price averages, as indicated by both the 10-and 22-day price average, which both hover around $124.50.
Currently, Disney is trading down 18% for the year.
Aside from its stock prices, Disney has had a mixed year financially.
For instance, although the company has seen a revenue increase of 26.5% over the last three fiscal years from $55.1 billion to nearly $69.6 billion, the last year has only seen an increase of 0.25%.
At the same time, the company’s operating income has actually decreased from $13.9 billion to just under $12 billion over the last 36 months. Furthermore, its ROE has dropped from 20% to 14% in the same time frame.
However, there is a bright spot on the horizon, as Disney is trading with an astronomical forward 12-month P/E of 113.18.
So, What’s the Verdict?
Walt Disney Co may be a magical company, but even its brand of pixie dust can’t make all the problems of 2020 go away.
Q.ai has compiled the data on Disney and rated the company according to our internal metrics – and the results are in.
As a result of the unwavering uncertainty in the company’s future, our AI has rated Disney an A in Technicals, a C in Low Momentum Volatility, and D’s in both Growth and Quality Value.
Overall, Disney has been rated Neutral throughout the month of October – and will continue to be until the next big piece of news changes its fortune.