Has Disney Run Out of Steam?

Over the years, Disney (DIS) has proven to be one of the best performing stocks. The company’s ability to diversify and grow has seen its shares jump over 1000% in the last few years. While it will be unrealistic to expect similar growth going forward, Disney is still a great and safe long-term investment.  The company is still actively looking for ways to expand its horizons and has good prospects going forward.

Disney is on its way to inaugurate the new Shanghai Disneyland Resort in the coming months. Towards the end of March, the company sold out the tickets for it within a few hours of its launch.
Rooms at both the Shanghai Disneyland Hotel and the Toy Story Hotel were also fully booked for the starting two weeks after inauguration. This indicates that the new park could soon become a foremost growth driver for Disney’s enormous theme park business.

Disney anticipates that its Shanghai Disneyland will primarily appeal guests from the 330 million income qualified people who live inside a three-hour car or train journey from Shanghai. The company decided to sell normal tickets for $57 (370 Yuan), while peak tickets for $77 (499 Yuan) for the first two weeks after its inauguration, the summer duration of July and August, and all weekends.

It is highly likely that Disney will gain huge profit from this new Disneyland as compared to Hong Kong Disneyland, as the new park’s normal tickets are remarkably 20 percent less compared to normal tickets of Hong Kong Disneyland, which is almost of one third size of this new park.

Disney still has not commented on long-term sales forecasts for the Shanghai Disneyland, but according to the consensus Li Jin estimates, the park will produce $3.7 billion to $6.2 billion in sales every year, from a total of around 50 million yearly guests. On the other hand, the company will share it sales with its partner Shanghai Shendi Group, which holds 57 percent stake in the Shanghai Disneyland.

Apart from this, the evolution of this new park could help the company balance its feebleness in cable broadcasting, where cord-cutters have increasingly reduced its subscriber count. In the middle of end of 2014 and 2015, the company’s ESPN subscribers figure decreased from 95 million to 92 million. However, bears state that the company’s Media Networks segment will continue struggling, but its new parks and movie franchises might balance the faintness of its media segment.


Disney needs to tackle its falling subscription count. However, the stock is still a good hold given the prospects of its theme park business. The Shanghai park alone could add billions of dollars in sales, which will be enough to offset the weakness in Media Network segment.
Published on Apr 4, 2016
By Akshansh Gandhi

Copyrighted 2016. Content published with author's permission.

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