The Walt Disney Company has made the very wise yet incredibly difficult decision to close their theme parks, cruise line sailings, and other profitable ventures in an effort to do their part and mitigate the spread of the current health pandemic.
Furloughs continue to be announced and no updated dates have been released for the reopening of these Disney attractions. However, J.P. Morgan Analyst thinks Disney could potentially open by June and turn a profit.
Analyst Alexia Quadrani, who has been vocal about Disney’s decisions to close, had this to share.
Everybody we talk to has a very different impression of when this crisis will end. Obviously, nobody knows. We’re assuming the parks will open on June 1 . Quadrani said about the domestic parks. She added: “It’s largely based on a couple of things—when the lockdown and the social distancing might become less stringent. It’s also the date that Disney is accepting reservations. If you call up and you want to book a hotel at Disney World, that’s the first date you can book—June 1.”
Quadrani also shared her thoughts on how park attendance upon reopening. “I think it will be pretty weak after it opens.” Adding that close to 20% of Walt Disney World’s visitors come from outside the US. Taking into consideration how travel will be affected, this is definitely a possibility.
There is also the economic impact this pandemic is causing potential visitors. “I think there will be consumers who are financially strapped given the economic situation we’ll be in.” Quadrani noted; an issue that will affect many who might have had a visit planned before this all happened.
All things considered, Quadrani notes that Disney will figure out a way to overcome this crisis and turn a profit in the end.
I have a huge degree of confidence in their ability to endure this crisis. This is a top-notch management team. And Bob Chapek, whose most recent background has been the parks, is now CEO. So you talk about having an expert in the field running the company. Bob Iger, I understand, is still very involved. And beyond that, they have a very strong balance sheet. [Disney] is the only stock we have in our media coverage that’s on J.P. Morgan’s Focus List. I’m very convinced this is an outperformer in the long term. They have the best content. They have a fantastic flywheel in terms of assets.
What are your thoughts on the parks reopening June 1st? Do you agree that Disney should move forward in returning to normalcy, for the sake of shareholders? Or do you think that’s a premature move for the company and that it might be a step back in the mitigation efforts? Let us know in the comments!