Disney’s Stock Falls After Plan to Double Theme Park Spending Revealed
By Movieguide® Contributor
Investors responded negatively to the news that Disney plans to double its spending on theme parks, raising its investment to $60 billion over the next 10 years.
“We’re incredibly mindful of the financial underpinning of the company, the need to continue to grow in terms of bottom line, the need to invest wisely so that we’re increasing the returns on invested capital, and the need to maintain a balance sheet, for a variety of reasons,” said Disney CEO Bob Iger.
“The company is able to absorb these costs and continue to grow the bottom line and look expansively at how we return value and capital to our shareholders,” he continued.
“We have an ambitious growth story that is supported by a proven track record and a bold vision for the future of our Parks business,” added Experiences and Products Chairman Josh D’Amaro.
The large investment will center around “stories, scale and fans,” as the company hopes to take its already leading theme parks to the next level. While 100 million fans visit Disney parks annually, Disney believes the market of people with “high Disney affinity” includes as many as 700 million.
The New York Post reports Disney’s “parks business has experienced growth ‘following previous periods of significant investment,’ adding that it also ‘will explore even more characters and franchises, including some that haven’t been leveraged extensively to date, as it embarks on a new period of significant growth domestically and internationally in its parks and resorts.’”
While Disney views this investment as crucial for the company’s future, investors weren’t so sure. Already trading low, Disney stock fell another 3% following the news, bringing it to $82.75 a share, just above its $80 nine-year low.
The lack of faith amongst investors is likely fueled by a subpar year for the theme parks. Park attendance was low this summer despite lucrative deals to attract more customers.
This shunning of Disney’s resorts was largely based on a pricing model that has forgotten its core, middle-class family audience. Furthermore, the theme park business was down as a whole this year due to inflationary pressure reducing the number of people willing to splurge on trips.
Beyond the park business, Disney has floundered across the board as the company struggles to adapt to the age of streaming and deal with its legacy media assets that have become major liabilities on the eve of cable’s death.
Shares of Disney’s stock closed at $82.47 last Thursday, marking the lowest close the company has seen since Oct. 16, 2014, when it ended the day at $81.74, Reuters reported.
“From our point of view, Disney has problems across just about every one of its businesses,” KeyBanc Capital Markets analyst Brandon Nispel told MarketWatch.
Disney’s three main businesses—streaming, studios and parks—have all had poor years. This has made it difficult for Disney, who has previously been able to point to one of these avenues as a success even if the others were struggling.
Over 2023, however, the company has, at large, only seen failure.
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