Disney's theme parks are dealing with shockingly lackluster summer crowds amid high ticket prices, 'woke' battles with DeSantis — here's why the stock might be too cheap to pass up
From ongoing battles with Florida Governor Ron DeSantis and his board appointees to subscriber losses on its streaming platform, Walt Disney leadership may be wondering if they’ve unknowingly fallen under a dark curse.
And now, to make matters worse, its theme parks are dealing with declining foot traffic.
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Travel analysts have clocked a dip in Disney’s theme parks visits that’s unusual for the peak summer months. Touring Plans, a company that tracks wait times for rides at various theme parks, has reported shorter wait times in Orlando-based Disney World and Disneyland in California in recent weeks.
The average wait time for a Disney ride was 27 minutes this year during the holidays, down from 31 minutes in 2022 and 47 minutes in 2019, according to Touring Plans analysis.
Disney’s management team had already lowered its parks earnings forecast in a recent quarterly report. Now the parks are also offering discounts for Christmas — which means they could expect the attendance slump to drag into another one of its typically busiest seasons.
Where is everyone?
In July, Florida’s governor Ron DeSantis told radio hosts on the Clay Travis and Buck Sexton Show that Disney’s “woke agenda” was to blame for the theme park’s lack of ticket sales. DeSantis and the entertainment giant have been embroiled in an ongoing battle over issues related to sex- and gender-identity education in schools. Conservatives supportive of DeSantis have been pushing for a boycott of the parks and the company’s streaming platform.
And the battle doesn't end there. In addition to two other lawsuits, DeSantis’ appointees to a board that oversees Disney World’s governing district launched a new complaint against Disney on Monday, calling $2.5 million in free passes and discounts for district employees unethical, according to a Tuesday report from the Associated Press.
But the data suggests those aren't the only factors at work here. Universal Park — a Disney rival that hasn’t been part of the ongoing culture war — saw its lowest attendance on record this past Independence Day, according to recent data. Six Flags and SeaWorld have also recorded lower attendance in recent months.
With a recession looming and Americans’ saving rates declining, consumers may simply be holding off on shelling out on expensive family vacations like visiting theme parks. Research from the Federal Reserve found that American households had completely depleted their pandemic-era excess savings.
Meanwhile, travel agents have pointed to higher ticket prices as a major factor in declining theme park attendance. On top of that, trips to Europe appear to be cannibalizing demand for domestic theme parks this year — likely both contributing to the downturn. In addition to the stormy political climate, experts also point to extreme weather and heat in Florida as a contributing factor.
But regardless of why Disney is having a terrible, horrible, no good, very bad season, it may turn out to be a magical opportunity for eager investors.
Read more: This janitor in Vermont built an $8M fortune without anyone around him knowing. Here are the 2 simple techniques that made Ronald Read rich — and can do the same for you
Disney stock is a cheap buy now
Disney stock (NYSE:DIS) hit a peak price of $197 in March 2021. Since then, it has plummeted 56%. The stock is currently trading at $85.56 as of Aug. 20, roughly the same price it was hovering at back in early 2015.
With Bob Iger reclaiming the CEO position and implementing layoffs, the company may have managed to cut enough costs to mitigate lower demand. Iger has also indicated that Disney’s dividend payouts could resume after they were suspended in 2020. Analysts, meanwhile, expect average annual earnings to grow 20% over the next three to five years.
The stock trades at a price-to-earnings ratio of 16.26 which could be justified if this double-digit earnings growth target is met.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
