Disney’s Stock Is A Dog

By Douglas A. McIntyre Published Mar 27, 10:45AM EDT

Quick Read

Disney’s Problems Arent Because Recent Deals Failed
Disney Is Only A Theme Park Company
It Has No Other Good Businesses
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Disney’s Stock Is A Dog — © Magic Kingdom Halloween Oct 2019 (CC BY-SA 4.0) by BellaisabellaS2

It does not seem like a new CEO has helped Disney (NYSE: DIS | DIS Price Prediction). Not even the anticipation that Josh D’Amaro will replace Bob Iger, who had an unsuccessful tenure. Disney’s stock is down by 17% this year, while the S&P 500 is down 5%. If there will be a turnaround, it will be well into the future, based on how the stock is trading.

D’Amaro’s first week has been called “very bad”. However, the stock was already skidding, which means “very bad” is not a reasonable description of Disney’s year so far. A week does not make a year.

Disney was working with OpenAI on a technology named Sora. OpenAI suddenly killed the Sora initiative. Reuters had reported earlier that “As part of the three-year deal, Disney said it would invest $1 billion in OpenAI and lend more than 200 of its iconic characters to be used in short, AI-generated videos.” But the deal was in its early stages, so there was no way to judge whether it would succeed. In other words, how it would affect Disney was a guess.

Then, there was a deal with Epic Games, well known for the success of its Fortnite. Disney put $1.5 billion into Epic Games in 2024. Writing about D’Amaro’s plans, Fortune said: “The partnership was the cornerstone of his fan-engagement mission: a Fortnite-powered Disney metaverse where Marvel heroes and Star Wars villains lived alongside players.” It is another example of a guess about a deal’s future.

Disney’s ABC also canceled “The Bachelorette,” which has been on the network for 22 seasons. The reason was domestic violence allegations against Taylor Frankie Paul, who was to be the show’s star this season. ABC is part of the Disney legacy business, which Disney is running as a sector in decline. So, it was a loss in a declining sector. How much damage from that?

Disney’s stock is down because it is a theme park company with no other promising businesses. In the most recent quarter, the results of Disney’s “Experiences” segment were $10 billion in revenue, which is 40% of the company’s revenue, and $3.3 billion in segment operating income, which is 72% of the total. It was also the only division that had operating income growth for the period.

Disney’s stock is down because it is a one-legged stool.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.