Last Opportunity to Acquire Disney Shares Below $100 Before Potential Price Surge?
Disney's stock has taken a nose dive, falling below the $100 mark for the first time in four months. Shares of Walt Disney plummeted 5% to $97.90 on Tuesday, a stark contrast to the global market's overall performance.
The financial squeeze isn't solely due to the general market slide. A visit to one of Disney's theme parks isn't budget-friendly, and a potential economic slowdown could hinder the steady click-clack of turnstiles. Add to that the escalating trade war, which could stir up turbulence throughout Disney's diverse range of subsidiaries.
This isn't just about a potential global recession, the risk of stagflation here and abroad. The escalating conflict could diminish the allure of American brands in foreign markets, impacting Disney more than you might think. Disney's influence is widespread, with half of its theme parks located overseas, and 54% of Disney+ subscribers streaming outside the US and Canada. Last year, foreign ticket sales accounted for a significant chunk of Disney's box office receipts.
Despite the gloomy outlook, there's a silver lining for Disney. The stock has given back more than the past four months' gains and is trading 13% lower than a year ago. However, a series of positive events transpired over the past year. Disney emerged victorious in a proxy battle against activist groups, beat earnings expectations for four consecutive quarters, turned its streaming business profitable ahead of schedule, regained its position at the top of the box office, and announced a succession plan, easing pressure on CEO Bob Iger's replacement.
Analysts are optimistic about Disney's prospects, with profit targets inching higher over the past three weeks. Disney is expected to earn $5.49 a share this fiscal year, and $6.15 a share in fiscal 2026, trading for less than 16 times next year's earnings, a significant discount in today's inflated market.
Disney's near-term results may be lackluster, with the company anticipating sluggish theme park revenue until at least later this year. Its box office success from last year has yet to be replicated in 2025. However, the future looks bright with positive buzz surrounding many upcoming films.
Given Disney's current low price, if global and American brands can avoid a prolonged economic slump, it's unlikely that Disney stock will remain in the doldrums for long. After all, the sky's the limit for a company as influential and diverse as Disney.
- A potential economic slowdown might not only affect Disney's theme parks, but also its fiscal performance, as a significant chunk of its box office receipts came from foreign ticket sales last year.
- Despite the current stock decline, analysts expect Disney's earnings to grow in the next few years, trading for less than 16 times next year's earnings, which is a significant discount in today's market.
- If the trade war escalation doesn't stir up too much turbulence throughout Disney's diverse range of subsidiaries and global economy, the low Disney stock price might not last long, given the company's widespread influence and diversity.
- To mitigate the financial impact of a potential economic slowdown, Disney could invest its money wisely, focusing on growing its streaming business and developing profitable content, such as future films.