Yahoo Finanza Disney+ European Debut Scant Consolation Amid Covid-19 Woes
Starting today, many millions who are already being cooped up at home, having their outdoor movements restricted by their respective governments in a bid to stem the coronavirus outbreak, will get to enjoy Disney+ and the plethora of timeless classics and blockbusters offered on the streaming platform.
It’s estimated that Europe will account for some 25 million Disney+ subscribers by 2025, adding to the platform’s existing 28 million customers located beyond the continent’s borders. The global goal stands at 90 million subscribers by 2024. Such projections promise a steady and lucrative revenue stream for the world’s largest entertainment company.
Yet, shareholders have refused to be enamored by such a rosy outlook in recent months.
Disney’s stocks have performed worse than the S&P 500 so far in March
Since its highest-ever closing price on November 26, 2019, Disney’s shares have plummeted 43.4 percent and is now trading at its lowest levels in six years. The stock’s 27.1 percent decline so far this month has outpaced the S&P 500’s 24.3 percent drop during the same period.
Covid-19: the scourge of the house of mouse
The pain points are obvious, and it’s all down to the coronavirus outbreak.
Disney’s theme parks have been shut, which gives up $20 million a day from admissions fees alone. The broader segment accounted for over a third of overall fiscal revenue and nearly half of profits in 2019.
Disney’s top and bottom lines are set to face even more pressure, given the delays to its movie releases, plugs pulled on film and TV production sets, and the foregone earnings on cancelled sporting events (which is severely stunting ESPN’s menu). These factors prompted S&P Global Ratings to recently cut its outlook on Disney’s credit rating to ‘negative’, taking into account that the latter still has to service almost $52 billion in debt.
Can new Disney CEO make shareholders dreams come true?
It will be interesting to see how Disney’s new CEO, Bob Chapek, whose appointment in February came as a shock to markets, handles the role amid turbulent times. Should the widely-anticipated global recession become a reality, Chapek will be kept busy for years trying to restore the company’s earnings prowess.
In the interim, at least shareholders in Europe can further console themselves by gorging on the Avengers, Star Wars, and even Home Alone franchises, all from within the confines of their homes, as they wait for the Covid-19 crisis to pass.
Written on 03/24/20 08:00 GMT by Han Tan, Market Analyst at FXTM
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