• 15 hours Bitcoin Nears $13,000 As PayPal Joins The Crypto Fray
  • 1 day DOJ Declares The Obvious: Google Is A “Monopoly”
  • 3 days Alibaba Is About To Make History Again
  • 4 days Robinhood Users Are Latest Target Of Pandemic Hackers
  • 6 days The Hydrogen Boom Will Provide A $200B Boost To Wind And Solar Energy
  • 7 days Will The 5G Rollout Overshadow This Major Merger?
  • 8 days Corporate Bitcoin Holdings Boost Crypto Confidence
  • 9 days Indonesia Rolls Out Augmented Reality Innovation To Combat COVID
  • 9 days Banks Are Getting Rich On Pandemic Overdrafts
  • 10 days The Real Reason China Is Betting Big On Renewables
  • 10 days Europe Wants To End The Big Tech Monopoly
  • 11 days New Breakthrough Could Transform Rare Earth Mining
  • 11 days Waymo Set To Roll Out Fully Self-Driving Vehicles
  • 13 days Aramco Dividend Won’t Cover Saudi Budget Gap
  • 13 days Credit Card Debt Plummets Amid COVID
  • 14 days Biden Plan Targets “Wealthy” Taxpayers
  • 16 days McAfee Arrested In Spain On Tax Evasion Charges
  • 16 days South Asia Is Set To Unleash A Flurry Of IPOs
  • 17 days U.S. Takes Stake In Irish Battery Metal Producer
  • 17 days Jobs Report Paints Dire Picture of US Economy
How The Stock Market Predicts Electoral Victory

How The Stock Market Predicts Electoral Victory

The circumstances are novel, and…

A New Twist In The TikTok Saga

A New Twist In The TikTok Saga

Late on Sunday, Microsoft dropped…

  1. Home
  2. Investing
  3. Stocks

Can Disney Bounce Back From Massive Coronavirus Loss?

Disney

You know it’s bad when Disney closes its doors.  Between 16 million and 18 million people visit the Disneyland Resort each year, or 44,000 daily potential coronavirus carriers and spreaders. These are daunting numbers, and now they’ve prompted Disney to close its parks in the United States and France through the end of the month. 

And it’s spring break season in the U.S., which normally opens the Disneyland floodgates in both Florida and California. 

In a statement, Disney said there had not been any reported cases of COVID-19 at Disneyland Resort, and that the closure was a pre-emptive move based on an advisory from the California governor. 

Other Disney adventures will also be put on hold, including the Disney Cruise Line, which will suspend all new departures as of Saturday, through the end of the month, while hotels and retail complexes at Walt Disney World and Disneyland Paris will remain open until further notice. 

Disneyland Paris, the most-visited location in France, remained open for days after three employees tested positive for the coronavirus but the park is set to shut this weekend.

In Japan, Tokyo Disneyland and DisneySea will remain closed through the end of April.  

Related: Oil Plummets As Saudi Arabia, Russia Face Off In Price War

Disney’s theme parks in Shanghai and Hong Kong were closed in January due to the outbreak. The profits from its facilities in China could drop by $280 million in the current quarter, the company said.

U.S. customers aren’t concerned about losing their money because Disney will offer refunds or credit for cancellations. Staff will also continue to be paid, but for the stock, it’s culling that adds to an already bad couple of months for the entertainment giant. 

As of Friday morning, there were 1,700 confirmed cases of coronavirus in the U.S., with 41 reported deaths. Trump was gearing up to declare a national emergency

But many, the symbolism of Disney closing already brought things to national emergency level. 

Since opening in 1955, Disney has only ever closed its doors a few times, but never for a prolonged period. Weather-related reasons could close it down temporarily, but the only non-weather-related events that ever forced such a move was a day of mourning following the assassination of Kennedy and 9/11.

There’s a ton of money at stake, of course.

In total, Swiss multinational investment bank UBS estimates that just closing Disney's U.S.-based theme parks for one month could cost the company $1.5 billion in revenue in 2020, and $803 million in operating income.

Disney generated more than $26 billion in sales at its Parks, Experiences and Products division in fiscal 2019, representing 37% of the company's overall revenue.  

Disney shares have fallen more than 20% in the last two weeks as the coronavirus forced the closing of theme parks, and the culling continued Friday. 

Disney’s stock is now trading close to its 52-week low, and its market cap has fallen to $174 billion. 

But Disney wasn’t doing that well before the coronavirus spread. 

Does that make Disney a bargain buy right now? Maybe. It’s worth considering that during the 2008 financial crisis, Disney shed up to 50%, and so did pretty much everyone else. But by 2010, it was soaring way ahead of others. If nothing else, there’s a good chance you can count on Disney for a rebound. But also keep in mind that there’s a lot to come back from here. It’s not just the park and the cruise line: Disney also has a series of new movies to release, and the audiences might not be there. That might actually be a boost for its new Disney+ streaming service, if nothing else. 

By Michael Kern for Safehaven.com 

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment