Analysts Say Disney Parks Could Lose $21 Billion By 2022 and Downgrade Disney Stock Accordingly

Ever since the parks closed in March, financial analysts have been doing their best to predict Disney’s uncertain future.

With the parks around the world closed, motion picture production halted, and more — how will Disney weather the storm? As we step into a new month, analysts predict Disney’s financial loses may be greater and longer than initially expected.

According to the Press Enterprise and analyst firm MoffetNathanson, Disney theme parks could lose $21.7 billion in revenue through 2022 as a result of the current outbreak and park closures. According to the report, that’s enough to pay for Shanghai Disneyland four times!

We previously reported on MoffetNathanson predicting the closures could last through mid-April, but the firm now believes the Disney parks will not re-open until July.

But the report even commented, “that might end up being too optimistic as well.” The firm expects  a “slower ramp back to a new normal” following the pandemic, so open parks might not expect the same cash flow Disney was seeing prior to the closures.

To compare to a previous national events, Disney park attendance dropped by 9% after the events on September 11th and did not rebound fully until 2005. Similarly, after the 2008 recession, Disney’s U.S. hotels revenue streams did not return to “normal” until three years later.

With this in mind, MoffetNathanson predicts Disney’s park attendance will drop by 50% through the end of the 2020 fiscal year. But, they claim there’s a chance it could rise to at least 75% in 2021 and to 90% in 2022.

So how will Disney work to protect itself financially when the parks open? MoffetNathanson expects to see discount ticket prices coupled with Disney pausing all “non-critical theme park projects” to save on expenditures.

According to the Hollywood Reporter, MoffetNathanson analyst Michael Nathanson stated “the economic impact on the company will be longer than most anticipate, especially given the risks of a second wave of infections after reopening.”

He downgraded his rating of Disney’s stock from “buy” to “neutral” and stated “we expect to see further pressure on earnings, limiting the stock’s performance for the near-to-medium term despite the company’s strong position longer-term.”

Analysts like Morgan Stanley also downgraded their target prices and are shifting towards a more cautious approach to Disney’s financial future.

Nathanson predicts a 33% revenue drop for theme parks this fiscal year (from $26.2 billion to $17.7 billion), but a 22% rebound in 2022 steadying at $21.3 billion. Additionally, he expects a 20% earning drop in Disney’s film unit and a 4% drop in media network earnings this fiscal year.

He summarized his belief in the company but acknowledged the uncertainty of the situation in saying, “While Disney has the advantaged assets to win in this new world, we fear that the uncertainty of the present situation creates significant and unrivaled earnings risk for the foreseeable future.”

When do you think Disney parks will start to reopen? Let us know in the comments!

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