Anyone price a trip to a Disney (DIS) property lately? How long did it take to peel yourself off the floor? The entertainment giant is starting to come to grips with the notion that, maybe, it’s getting a little too expensive for its own good. The notion did not sit well with investors, either, who sent shares down nearly 2% in Monday afternoon’s trading.
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Disney’s recent earnings report featured a major win for Disney’s streaming operations, which brought in $293 million in profit by themselves. With that kind of cash coming in, it is easy to wonder why the parks are so spectacularly expensive, a development that is giving executives cause for alarm. When some sources are noting that it is actually cheaper for an American family to go abroad than it is to go to Disney, it becomes entirely possible that the parks will become an overpriced boondoggle no one visits any more.
That could be a serious problem. Reports note that the theme parks represented 70% of Disney’s overall operating income for the 2023 fiscal year. By way of comparison, it was only 41% in 2019. And Disney is eager to cover its tracks on this matter, declaring that visitors don’t need the highest-price tickets and can simply wait in longer lines instead. Most price hikes were seen for “premium packages” or “higher-demand dates,” and that Disney must be “smart about pricing.”
DEI Dump
Further, reports noted, it is not just pricing that has Disney on edge. The ongoing issue of diversity, equity and inclusion (DEI) programs is also taking hold, and the House of Mouse just abandoned two of its DEI programs, based on a new Securities and Exchange Commission (SEC) filing.
The “Reimagine Tomorrow” program is out at Disney, the report noted, as is “The Disney Look,” a program with called for certain “appearance guidelines” to be followed by employees. The “Reimagine Tomorrow” program, meanwhile, focused on “…amplifying underrepresented voices and untold stories as well as championing the importance of accurate representation in media and entertainment.”
Is Disney Stock a Buy or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on DIS stock based on 18 Buys and six Holds assigned in the past three months, as indicated by the graphic below. After a 0.52% rally in its share price over the past year, the average DIS price target of $128.32 per share implies 17.61% upside potential.
