Op-Ed: If Disney Stock Is So Bad, Why Is Nobody Shorting It?

in Disney, Op-Ed

Bob Iger and George Lucas offically signing for Disney acquiring Lucasfilm (Star Wars)

Credit: StarWars.com

If all the buzz about the nosedive in Walt Disney Company value is real, why is no one trying to short Disney stock?

Bob Iger at the construction site for the new Frozen land
Credit: Disney

What It Means to Short Disney Stock

If you’ve ever watched The Big Short or lived through the 2008 collapse, then you likely know what shorting is. When something seems too big to fail (like the Walt Disney Company or the real estate market), even when the stock drops, no one really thinks it’s going to hit bottom.

Thus the short. It’s basically a bet that you place in public trading where you assume that the stock price will tank. The shorter borrows shares, sells them, then intends to buy them back for cheaper in the future.

How Shorting Works

To short Walt Disney stock would mean assuming that the company is likely to fail, just not fully. The shorter borrows security, agreeing to fees. Next, it’s selling those same shares on the open market, proceeds being held by the investor. Then it’s a waiting game for the stock price to decline.

Related: Is Disney Choosing to Fail? Many Believe So

Once it does, the shorter buys back the shares, known as covering the short position. They then return the borrowed shares to the original lender. The difference in buyback price turns a big profit (when it works). With all the talk about the streaming lawsuits and a cursory look at Dow Jones, it might seem like betting against Walt Disney Co. is a good way to go.

Bob Iger
Credit: Drew Angerer/Getty Images

About Walt Disney Co. Stock

To short a stock, regardless of whether it’s Disney Media or some Wall Street enterprise, means knowing what to expect. The world of entertainment distribution is a messy one right now, especially focusing on the entertainment strikes and generally low numbers at movie theaters compared to pre-COVID numbers.

But turning away from that revenue stream, there are still the theme parks. These represent a massive share of what DIS stock holds. Yet even there, concern rages with the potential impact of Governor Ron DeSantis on the bottom line for Disney investors. “Death by a Thousand Cuts” is an ancient way of taking down a conglomerate. It appears that Walt Disney is getting cut up pretty badly.

Bob Iger
Credit: Financial Times

So Why Are the Two Main Investors Staying Put?

Companies are like matryoshka dolls. They nest within each other, with separate publicly traded enterprises being the core investors in the Walt Disney Company.  The main investors in the company are companies, including:

  • Vanguard Group Inc. with 7.6% of the total shares outstanding.
  • BlackRock Inc. with 6.3% of total shares outstanding.
  • State Street Corp. with 4.1% of total shares outstanding.
Bob Iger and Rupert Murdoch
Bob Iger (Disney) and Rupert Murdoch (Fox)

Individuals With Significant Walt Disney Company Shares

Despite the controversy over Bob Chapek and Bob Iger, Walt Disney World, and Disney Park international earnings, these investors remain steadfast:

  • Robert A. Iger (CEO Bob Iger) holds 0.06% of the company.
  • Christine M. McCarthy holds 0.01% of the company.
  • Alan N. Braverman holds 0.01% of the company.

If these names sound familiar, it’s because they represent the company in various executive capacities. They remain unwavering in focus on Disney, despite the maneuvers with ESPN and the concerning state of Disney’s share value at present.

According to various takes from analysts, shorting doesn’t even come up. Yet with all the sensationalism about DIS stock truly falling; and the Walt Disney empire actually falling, where are the whispers of shorting the market?

What do you think about DIS stock? The market is always a gamble, share your take below!

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