The Smiles Fade at Disneyland
The Walt Disney Company has lost one and a half-billion-dollars in three coronavirus-hit months. Its theme parks have been shuttered, baron and creepy. Its movies have no audiences, theatres closed set to stay closed for some time. The company’s ad-based wing is even suffering because sports have been called off, leaving only Disney+ to offer hope.
“We’ve got a bullseye on our back,” said the new chief executive, Bob Chapek, in yesterday’s conference call. “However, we see encouraging signs of a gradual return to some semblance of normalcy in China.” Disneyland Shanghai will reopen with masks, temperature screenings, and other contact tracing systems, but this means little to investors with slashed dividends!
MoffettNathanson, a research firm, is cutting the Mouse House from ‘buy’ to ‘neutral.’ Its rationale is that Disney is about bringing people together, and that’s quite tough with a contagion on the loose. In a note, it said “until there is global comfort health-wise with that behavior, Disney’s earnings will be fundamentally impaired.”
The saying goes that we should buy at the point of maximum pessimism. It’s not about share of the market for Disney, it’s about share of the heart. This is a great brand with pricing power and solid ‘franchise’ characteristics; parents trust its movies to the point they’re willing to leave their children alone watching them without checking the scenes beforehand. It’s an iconic compounder; it will, of course, survive!
The Invstr community is grabbing this one with both hands. The stock rocks a 91% bullish rating with a 61% accuracy score, so there’s credibility in the buying and surely greener grass ahead. Are you in on this?