Can Disney Recover From Covid-19?
Disney is a household name known by young and old for creating tales of friendship, love and happy ever afters. But after the Coronavirus pandemic can there truly be a fairy tale ending for this icon?
Parks and hotels across all continents have been stood empty for months which will of course effect Disney’s revenue dramatically. Taking just one park as an example we can see the huge financial impact that this is having. Magic Kingdom in Orlando Florida has a capacity of 100,000 guests, at peak time these guests are paying $129 per adult ticket and $124 per child ticket. That means Disney could be losing $12,900,000 a day from one park in ticket sales alone! Not to mention the revenue from sales of food and merchandise in the park that they are also missing out on. With parks in California, Florida, Tokyo, Paris, Hong Kong and China this can equate to huge sums of money.
Of course, the parks are nothing without the films, the foundation of the Disney empire. However, with theatres closing films are having to be delayed and in some cases they are foregoing the theatre process all together and film makers are trying to claw back some revenue by opting to sell films via pay per view platforms. Disney’s recent top films grossed an insane amount of money in the box offices, Frozen 2 grossed $1.5 billion and The Lion King took even more at an estimated $1.657 billion. With delays to two of its biggest releases of 2020 (Mulan & Marvel’s Black Widow) this is sure to have a great impact on Disney’s yearly balance sheet which is enough to even make Mickey sad!
Another string to Disney’s bow is the cruise liners which are also hemorrhaging money at an alarming rate even by the minute.
“Disney Cruise Line makes $1,788 per minute
The subsidiary of The Walt Disney Company, Disney Cruise Line holds 3% worldwide cruise market by passengers. Disney Cruise Line currently operates four ships and three more will join the fleet in 2021, 2022, and 2023. With total revenues of $950 million in 2016 DCL made $1,788 per minute”
(https://crew-center.com/how-much-money-biggest-cruise-companies-make-every-minute)
Looking towards the near future it is possible that even if the lock down restrictions ease that this may not be the same for cruise ships as people are in such close proximity to each other. This may mean the cruise business model is a sinking ship.
It is no surprise that investors saw Disney shares drop from a year high of $150 to a year low of $86 in the midst of the outbreak. Although the share price has slowly started to rise it could take years to try and gain back the losses. There is also a risk of a second spike or outbreak which is near on impossible to predict.
With an all-time high stock price of $153 it does show there is the potential for a high return if Disney can recover , however it may take more than Prince Charming riding in on his white horse to save them.
