The Walt Disney Company’s stock price continues to tumble, finishing the trading day near it’s lowest value in 2024. At market close on July 24, one share of Disney stock was priced at $89.80. That’s close to the year-to-date low of $89.45 set back on January 11.
It is worth noting that Disney stock is up just over 3% over the past 365 days, but that’s in the shadow of a 3-year window where the stock fell over 48%. The stock market as a whole has been up significantly over the past three years, making Disney’s slide a frustrating one for shareholders.
Perhaps the lone bright spot for Disney shareholders is the company’s dividend slightly increasing. The dividend rose from $0.30 per share in 2023 to $0.45 per share in July 2024. But, that trails well behind the semiannual dividends of $0.88 per share from back in 2019.
What’s causing Disney’s stock price to drop? There’s several answers and many of them are self-inflicted issues.
CEO Transition Plan
Bob Iger returned as CEO with the primary goal of leading Disney out of a turbulent spot and creating a new leadership transition plan. Results on the first portion of his mission are mixed at best. Regarding a new CEO, Iger received a new contract extension in 2023 that would keep him at the helm into 2026.
Regardless of your opinion’s of Iger’s performance, it’s objectively a problem that Disney doesn’t seem to have a clear transition plan. Remember that it was Iger who appointed Chapek, and that many of Chapek’s biggest criticisms were either Iger initiatives or supported by Iger while he was in charge.
Who will Iger and the board select? That’s anyone’s guess right now. There are a few potential names being thrown around, but we’d expect confidence in the company to continue to waffle until a final name and direction are selected.
Guest & Fan Backlash
Disney decided to push their prices higher and higher without improving the guest experience. That’s apparent in the theme parks, but it also lends itself to Disney’s streaming service that has questionable value even for diehard fans.
At the theme parks, Disney has stripped out perks while repeatedly bumping up prices. Many guests feel they are paying more or less. The value proposition has slipped considerably. Making matter worse are the constantly changing and evolving systems (virtual queues, line-skipping, Lightning Lanes) guests need to know just to visit the parks. That’s a big problem when attendance is slipping and hotel occupancy has reached worrisome levels. And, to make matters worse, Universal (Comcast’s theme park division) has seen big revenue drops already. However, they’re aggressively combating that drop. More on that below.
On the streaming/film side, Disney’s woes are well documented. Inside Out 2 is a massive, massive hit, but that’s where the positives mostly end. Disney’s exclusive content on Disney+ has been panned, and some feel their direction for Star Wars and Marvel is lacking any genuine quality. We believe Marvel’s X-Men ’97 is a noteworthy exception, but those types of exceptions have been few and far between. Disney needs to find its old touch of quality.
No Concrete Theme Park Plans
Disney will likely announce several new theme park projects at the D23 Expo in August. But, assuming all those projects are actually approved and not just blue sky dreams, it’ll be years before any guests can experience them. That’s a big problem. With guests souring on the current theme park experience and prices, Disney doesn’t have anything major ready in the pipeline.
Meanwhile, Universal is readying an impressive theme park in Epic Universe in Orlando. Disney’s biggest competition isn’t waiting to expand and offer new experiences for their guests. That’s a stark contrast to Disney who has favored ride replacements rather than genuine capacity improvements. With the competition mounting (in a hurry), Disney has very little to combat it. That’s a worrisome proposition.
What’s Next?
It’s going to be a bumpy road forward. Disney has their work cut out for them. It’ll take some bold swings and a lot of creativity to bring Disney back into the powerhouse it has been in modern times. We think Disney needs to actually listen to what their fans want rather than trying to tell them what they want. We think the theme parks need to be a truly unique experience that has a bit of everything, and not just the latest movie tie-in.
Most importantly, we want to see a Disney that takes risks and abandons the formula that churns out uninspired designs (especially at the hotels and restaurants), and makes visiting the theme parks fun again. Then, and only then, will the stock price rebound as guests find value again in what Disney offers.
