Disney’s stock has significantly dropped today. It has been in decline for a few days and has plummeted to $93.64 at the time of this article. But why is it falling?
An impending strike and PR nightmare.
While we have not yet had an earnings call for Q3 that ended on June 30th, we do have the looming strike facing Disneyland.
Disney has made it clear that profit from the theme parks has been the bright spot amidst box office failures and streaming overspending. Investors know that Disney needs all the theme parks working to make money right now, and the threat of a strike is daunting.
Today and tomorrow, the negotiating groups from the unions and the Walt Disney Company will continue to meet and try to agree to new contracts. However, the unions have the authorization to strike if an agreement isn’t reached.
This will most likely cause a strike. If a strike drags on into August, it could tarnish the earnings call on August 7 and the highly anticipated D23 Expo on August 9-11. Global media outlets will be at the event, and many will visit Disneyland as well. That could give the cast members more access to media coverage and make the Walt Disney Company look even worse.
The Theme Parks
News that the parks are not very busy this summer could also raise investors’ concerns about Disney. Again, parks are key to Disney’s bottom line, and Bloomberg has published an article about Disney’s attempt to win back crowds with discounts.
However, Disney has made it clear that while attendance is down, spending per guest is up, primarily due to their price hikes.
Discounts could disrupt theme park profit margins. Now, Disney has promised to spend a huge amount on theme park upgrades and new attractions over the next ten years as well.
Battles for board seats
The stock is currently down, but it’s been down for months after hitting a peak of $122.82 ahead of the Disney Annual Shareholder Meeting. After various news outlets leaked that Nelson Peltz was not going to win his proxy battle, the stock plummeted and ended up hovering around $102-$104 per share for weeks. Now, it’s dropped $10 more.
One Walt Disney Company Board member, Safra Catz, recently stepped down without explanation. This is just causing more speculative “fuel for the fire.”
Disney needs to get this under control and fast. Negotiating an acceptable deal with the Disneyland unions is a must to offset the PR damage that they could face if a strike happens during their shareholder report and D23.
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