Disney Stock has been officially downgraded by KeyBanc. You can call it the beginning of the Disney decline, as the corporate behemoth continues to go woke. It doesn’t seem to be working.
“While Disney appears less expensive versus its historical average, we believe the stock is unlikely to work until a number of items have line of sight to being resolved,” an analyst for the firm said. Previously, the firm defined Disney’s stock as “overweight,” making it a most robust investment, as Fox Business notes. Now it’s been downgraded to the “sector weight” category, with a .89% change. In August of last year, Disney was trading at 124.26. Now, they’re at 89.55.
Slow subscriber growth seems to be one of the main culprits. The most recent 2023 quarter saw a 4 million subscriber loss for Disney+ and its other owned platforms, ESPN and Hulu. This is the first time Disney has seen a net loss since the streaming service began in 2019.
Theme park attendance is also taking a serious hit. Reports have surfaced detailing a “ghost-town” like atmosphere for the 4th of July weekend at both of Disney’s major theme parks. But that weekend historically has placed within the top three busiest weekends of the year for the company. And, data bares that out. The typical wait time for rides was just an hour. Compare that to the average 100 minutes most of their theme parks would get pre pandemic.
But let’s not forget about Disney’s efforts to go woke. Casting a black Little Mermaid might illicit a shrug. But the fact that Disney was so aggressive in promoting their involvement with the Diversity and Inclusion program led to some natural backlash. “Disney is committed to celebrating an inclusive, respectful world. We create authentic and unforgettable stories, characters, experiences, and products that capture the imagination of our global audiences,” the company says on their investor’s web page. Notice how they don’t say, “we are committed to creating stories that educate and inspire all children.” They’re getting very specific in terms of whom they cater to, and therefore are losing their already existing audience.
The Little Mermaid budget was $250 million, and while they did end up with $500 million at the box office worldwide, the movie can only be considered an anemic success. Lady and the Tramp, for example, had a $60 million budget but made $187 million at the box office when it was released in 2019. To cover debts and other costs, Disney usually expects for their movies to make back at least three times their budget. Disappointing movie ticket sales are scaring away investors.
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