The Walt Disney Company (NYSE:DIS) theme parks projected lose of $21 billion because of the coronavirus
Disney revealed it lost a potential $1 billion due to park closures over the COVID-19 outbreak, but that might only be the beginning.
Disney theme parks could lose close to $21 billion in revenue through 2022 because of closures from the coronavirus pandemic, The Orange County Register reports.
To put that mind-boggling loss into perspective, that’s enough to pay for Shanghai Disneyland four times over.
Shayne Heffernan Trade Idea
“We predict the future price of Disney will come in around $125.16 which will give the stock a price increase of +26.68%.
“It is now clear that the current pandemic impact on the travel and hospitality industries is much more severe than both prior downturns. When will the parks reopen? How will Disney approach staffing them? Will they only open up one park like the Magic Kingdom to optimize operations? Given limited air travel, how many of their Orlando hotels will be up and running?”
Why This Matters
Earnings for the company’s second fiscal quarter will give Wall Street an idea of the damage to Disney so far, though they account for less than a month of domestic park closures.
Analysts on average expect second quarter earnings per share of 91 cents, down 43% from the same period of time a year ago, according to FactSet. Nathanson estimated that full-year profits (excluding certain items) will fall 66% to $1.5 billion at the parks segment for fiscal 2020.
Like most other media companies, Disney’s stock has taken a drubbing during the pandemic. The stock, which closed at $103.18 on Monday, has fallen 29% so far this year.
The vast majority of the furloughs come from Disney’s parks, experiences and products segment, which employs 177,000 people, including workers at its retail stores and four cruise ships. An estimated 31,000 work at Disneyland Resort. Walt Disney World employs more than 70,000 in Florida, making it one of the state’s biggest job sources. Disneyland Paris is estimated to employ 17,000.
Although Disney has not disclosed any figures, furloughs and other cost-saving measures could save the company an estimated $500 million a month, according to JP Morgan analyst Alexia Quadrani.
Chris Duarte, president of Workers United, Local 50, which represents about 7,650 Disney food and beverage workers at Disneyland, said the furloughs will be tough on staffers, many of whom are filing for expanded unemployment benefits.
However, he said the union was pleased to retain health benefits for its members. Disney also agreed with labor unions to hire back workers based on the seniority rules in the workers’ contracts.
“Our main goal was to ensure benefits for our members,” Duarte said.
It’s an anxiety-inducing time for people like Glynndana Shevlin, 60, who has worked at the Disneyland Hotel for 28 years as a food concierge and a wine server. Shelvin, single and living in a studio apartment in La Mirada, said she is anxious about the future as she waits to collect unemployment benefits to help her pay her bills until the resort reopens. “This is nerve-racking,” she said. “So far, I’m doing OK.”
The furloughs have also spread to Disney’s movie studio, which has suffered from the closure of movie theaters, the delay of releases such as “Mulan,” and the pause of film shoots including a live-action remake of “The Little Mermaid.” Cuts have affected people in distribution, marketing, publicity and production, according to people familiar with the matter who were not authorized to comment.
ESPN has been pummeled by the shutdown, losing much of its main draw, live sports, which require large production crews who are now idle. The network has furloughed production crews for live sporting events.
Disney TV staffers in Burbank have been spared from furloughs, and crew members on shows that halted production were sent home with three weeks’ pay. More trouble could come to the company’s TV division if a recession leads to a prolonged drop in advertising revenue and an acceleration in cord-cutting.
The company’s growing streaming empire also avoided furloughs. Disney’s new streaming service Disney+ has been a bright spot as coronavirus-related closures keep viewers glued to their phones and TV screens. Disney recently said the $6.99-a-month streamer had passed 50 million subscribers in five months after launching in western Europe and India.
Disney paid parks workers for five weeks of closures.
“They tried to keep people on the payroll as long as they could reasonably afford to,” said David Heger, an analyst at Edward Jones who has a “buy” rating on Disney’s stock. “Ultimately when you have parks shut down and a lot of operations not running, it’s hard to justify keeping that level of costs. Right now, Disney kind of has to go into conservation mode.”
People who follow Disney closely don’t expect the company to lose its position as the entertainment industry’s powerhouse, but how long it will take for it to recover is unclear, especially at the parks.
Anil Puri, an economics professor at Cal State Fullerton and director of its Woods Center for Economic Analysis and Forecasting, said he expects Disneyland to eventually return to strength.
However, the company will have to come up with measures to apply social distancing and enhanced sanitation standards in the parks to minimize the transmission of the virus. That could mean checking guests for fevers at the gates and limiting capacity for a period of time.
“It’s going to be a slow process,” Puri said. “Everywhere you go, you’re very close to people, standing in line, going through turnstiles. It will be difficult.”
Laurinda Fiddler, 58, a retail worker at Disneyland Resort, where she’s worked since 1984, said the furlough came at an awkward time. She was in the process of selling her home in Moreno Valley to buy a bigger home so she can move in her elderly mother from Colorado. Without an income, she can’t qualify for a home loan.
While she agreed the union worked out a good deal with Disney, Fiddler is looking for other jobs as she applies for unemployment benefits. “I’m open to what happens,” she said.
Overall, the bias in prices is: Downwards.
The projected upper bound is: 115.81.
The projected lower bound is: 85.03.
The projected closing price is: 100.42.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 25 white candles and 25 black candles.
A long upper shadow occurred. This is typically a bearish signal (particularly when it occurs near a high price level, at resistance level, or when the security is overbought).
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 19.8754. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 3 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 46.03. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 32 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -42. This is not a topping or bottoming area. The last signal was a sell 2 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 28 period(s) ago.
Rex Takasugi – TD Profile
WALT DISNEY CO closed down -2.120 at 101.060. Volume was 2% above average (neutral) and Bollinger Bands were 45% narrower than normal.
Open High Low Close Volume 101.510 105.180 100.900 101.060 3,840,858
Technical Outlook Short Term: Oversold Intermediate Term: Bullish Long Term: Bearish
Moving Averages: 10-period 50-period 200-period Close: 104.56 103.82 130.43 Volatility: 55 98 54 Volume: 2,937,239 4,856,099 2,918,582
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
WALT DISNEY CO is currently 22.5% below its 200-period moving average and is in an upward trend. Volatility is low as compared to the average volatility over the last 10 periods.
Our volume indicators reflect volume flowing into and out of DIS.N at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on DIS.N and have had this outlook for the last 17 periods. our momentum oscillator has set a new 14-period low while the security price has not. This is a bearish divergence.
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