A forecast released this week by Wells Fargo says Walt Disney’s theme parks are dealing with deep losses amid the coronavirus shutdown and attendance will take about two years to return to normal after commerce returns.
The report to investors, released Tuesday by bank analyst Steven Cahall, downgraded Walt Disney Co.’s stock but came two days before Disney shares surged on news that Disney+ subscribers had surpassed 50 million.
Disney stock closed up 3.39% Thursday to 104.50.
Painful losses at theme parks
But the good news on the entertainment front may only be a drop in the bucket for the losses being seen in the other aspects of the company.
The theme parks so far have been the hardest hit.
Disneyland in California and Disney World in Florida and of all its related parks have been shuttered since March 14. There were earlier shutdowns of parks in Paris, Shanghai and Hong Kong. All the U.S. Disney resorts are closed indefinitely, and Disney cruises are also suspended.
Those businesses, combined with experiences and products, are where Disney makes most of its money, last year accounting for $26.2 billion in sales, according to MarketWatch.
"We don't think Parks can get back to anything close to full capacity until testing and/or vaccines are far more ubiquitous," Cahall told investors Tuesday, according to The Hollywood Reporter.
Other parts of Disney
The other arms of the Disney company include studio entertainment, media and television, and an international division. The company’s holdings include ESPN, Marvel Studios, Lucasfilms, Pixar, 20th Century Studios and Hulu.
“We’ve thought the value creation from Disney+ (and later on Hulu) would be enough to more than offset a declining environment for media networks,” Cahall also said Tuesday. “We still believe in that, but we didn’t foresee this unique and severe downturn for Parks.”
After Cahall announced the new price target of $107.00 on Tuesday, Disney shares closed the day at $101.24, up $1.88 or nearly 2 % from the previous day.
Walt Disney Co. chief executive Bob Iger said Tuesday that discussions are underway about new procedures that could be implemented when the theme parks reopen. He suggested temperature screenings could be used for guest entry.
Behind the scenes
Behind the scenes, reports also say senior executives are “furious” about having to take 20% to 30% pay cuts during the prolonged shutdown, and say the company only gave them two days to sign new contracts.
A week ago, Disney announced it would “furlough employees whose jobs aren’t necessary at this time,” but the company may still have to offer benefits and pay in some cases for union employees. The company has also canceled upcoming internships.
Disney World and Disneyland earlier this week waived upcoming monthly payments for annual pass holders after some customers complained on Twitter that the company was continuing to bill during the shutdown.
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