Have you considered a trip to a Disney (DIS) park this summer? If you have, you are likely not alone. However, you are also likely not alone in discovering that the price tag has ballooned to the equivalent of major home appliance purchases or even a cheap used car. Park concerns are starting to weigh on the media giant’s stock price, with Disney shares down nearly 3.5% in Wednesday afternoon’s trading.
The notion of a Disney park trip is increasingly out of reach for the common American family, and that development is beginning to hurt returns. While Disney’s latest earnings report showed that its streaming service is starting to do quite well, it is losing ground at the park level.
Although some of that loss is reasonable enough—a “cyclical softening” in China is noted, and Disneyland Paris’ figures took a hit while everyone was at the Olympics—it’s hard to deny the impact that the price tag has on the American wallet in terms of why park attendance is in open decline. Moreover, higher-income Americans are not looking to go to a Disney park either. Instead, they are doing more international travel these days, which further hurts Disney.
A Larger “Warning Sign for the Economy”
Interestingly, the notion of a Disney slide is proof that the economy itself is struggling, according to Business Insider. While certainly, Disney is doing some of this damage to itself—it admits that “high costs linked to inflation” are part of the problem—Disney noted that a “larger drop…than expected…” in consumer demand is also an issue. The consumer is pulling in and circling the wagons, and that will likely have recessionary effects on the broader economy.
In fact, Disney expects “demand moderation” to persist for the next few quarters at least. It would be one thing if this were a temporary downturn, a thing that would fade with, say, the Olympics ending. But this is looking more like a trend than a hiccup, and that means very little good for Disney or the broader economy.
Is Disney a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on DIS stock based on 21 Buys and five Holds assigned in the past three months, as indicated by the graphic below. After a 0.33% loss in its share price over the past year, the average DIS price target of $126.64 per share implies 45.66% upside potential.
