Long-time Walt Disney Company shareholders are furious. Its shares have fallen significantly since they peaked in November of last year, by more than 45 percent during the past year. Since then, Disney has seen a loss of over $150 billion in market value.
For years, Disney was the envy of the media business. It outperformed the performance of other industry juggernauts including Time Warner, Fox, Paramount, and CBS under former CEO Bob Iger. Its studios released a number of hugely popular movies from the Pixar, Star Wars, and Marvel franchises.
The COVID-19 pandemic, on the other hand, nearly completely destroyed Disney’s theme parks. Tens of thousands of people had to be let go as a result of closing these parks. The volume of visitors to these parks has increased over the past few months to levels close to those before the pandemic, although it may soon level out.
Given that it was recovering from the COVID-19 epidemic, Disney’s most recent reported quarter was average. Revenue increased by 23% to $19.2 billion. $470 million in net profits saw a 48 percent decline. “Our strong results in the second quarter, including fantastic performance at our domestic parks and continued growth of our streaming services—with 7.9 million Disney+ subscribers added in the quarter and total subscriptions across all our DTC offerings exceeding 205 million—once again proved that we are in a league of our own,” said Bob Chapek, the company’s CEO.
Chapek did not mention that Disney+’s growth has significantly slowed. The recent fast surge in Disney+ subscribers is definitely over in a congested market where Netflix and Amazon Prime are the dominant players. Disney staked its future on technology, but that gamble is not paying off.
Recently, analysts at Guggenheim on Wall Street, including Michael Morris, downgraded Disney stock. He expressed worry over the lack of significant improvement in Disney theme park traffic. He is also concerned about the enormous sums of money that the business must invest in order to keep Disney+ expanding.
Disney investors have seen a sizable percentage of the company’s worth go. Morris is correct, so it’s not over yet.