Disney’s stock had been on an upward trajectory for over a decade under the guidance of then CEO Bob Iger. While the week to week changes were always influx, the general trend was positive. The business community and the stock market trusted Bob Iger and loved how he had turned Disney into a media juggernaut. Then came Covid-19, the global pandemic that has destroyed entire industries and hobbled many of the world’s most reliable brands. The timing could not have been worse, or better, depending on your outlook, as CEO Bob Iger quickly handed the reigns to current CEO Bob Chapek. The succession plan was had been in motion for months and was approved by the Board of Directors. Mr. Chapek took over the company days before the unsinkable ship struck the massive iceberg. Mr. Iger did not hand the company over and head off to retirement, he has stayed on as Executive Chairman and has been working side by side with Chapek to navigate this difficult year.
In the late winter of 2020, the Covid-19 pandemic quickly shut down all of Disney’s theme parks around the world, slammed the breaks on television and movie productions, shuttered live theatrical shows, and halted their entire cruise line. Movies that were already produced had been shelved due to closed movie theaters. Needless to say, Disney’s stock price took a massive hit. The only saving grace for Disney at this point was Disney+, their wildly successful foray into streaming.
Since the initial bottom fell out of Disney’s stock, it has slowly been creeping back. Buoyed by the success of Disney+ and the strength of the Disney brand. Parts of Disney’s parks division began to reopen slowly, but large portions are still closed to this day. Disney’s theme parks and cruise lines provide a huge portion of Disney’s operating income. Having many parks closed, other parks at limited capacity, and the entire cruise line shut down indefinitely, has truly hurt Disney’s bottom line.
On Thursday of this week, November 12th, Disney will release it’s fiscal fourth quarter results, and the expectations are that the company has taken a $3.5 Billion hit due to Covid-19. The company has laid off thousands of employees and just today we got news of further furloughs due to the continued closure of Disneyland in Anaheim California, we will have that story posted soon on the website. It seems that Disney cannot seem to catch a break and countless cast members seem to be paying the ultimate price.
Early this morning, Monday November 9th, a small ray of light shined through to provide some hope for everyone around the world. Pfizer announced that their early data indicates that the vaccine they are developing has an astonishingly high 90% success rate. This news turned even the most ardent skeptics into believers. Immediately after this announcement the markets around the world responded with massive gains. Disney was no exception.
After the news of the early success of the Pfizer vaccine Disney’s stock price jumped over $17 a share, before settling back down to just over $15. These gains were so massive that it brought the company’s stock price to near pre-pandemic levels. What does this mean? Well, that is always a hard question when it comes to the stock market. The simple answer is that investors have strong confidence in the future strength of the Disney company. While the news of a successful vaccine does not change the current circumstances for the company, it indicates that we may see a quicker than expected return of theme parks, movie theaters, cruise ships, retail, and televised sports.
For the time being though, the Disney company is still suffering due to the halting of their largest income generators. There will likely be continued layoffs announced, along with furloughs for those still employed. The financial situation for Disney is not going to turn around overnight, but, the news of a promising and successful vaccine does bode well for a sooner than expected and stronger than anticipated recovery.
The bottom line is this, for the immediate term, there does not seem to be a lot of great news for the company’s financials outside of subscriber growth for Disney+. However, if today’s news is any indication, we could see closed parks reopening, limited parks change to full capacity, live theater return, and cruise ships back on the water very soon. This will restart the massive income generating sectors of the company and we can start to see cast members getting rehired and the magic from the parks and the movies spill back out into an eagerly awaited public.
Stay with The DisInsider as we continue to monitor the effects the Covid-19 pandemic has had on the Disney company. We will also be reporting on the fourth quarter financial report this Thursday.
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