Top line

Disney shares slipped on Wednesday after the company warned of weakness in its cash-cow parks division in its morning quarterly report, sending the share price to a new low in 2024 as the entertainment conglomerate grapples with a prolonged Wall Street slowdown.

Key data

Main critics

Daiwa analyst Jonathan Kees wrote to his clients that he had a “positive impression of the results” despite the “emotional reaction of investors” to Iger’s comments on slowing demand.

Important background

The latest decline sends Disney stock even deeper into its years-long slump. The stock’s price of $86.31 on Wednesday is almost exactly the same as it was 10 years ago, when it closed at $85.51 on Aug. 7, 2014, a period in which the S&P 500 rose more than 170% (when accounting for dividends, Disney has returned 11%, compared to 230% for the S&P). Disney stock’s performance has lagged even since Iger’s widely celebrated return to the CEO post in November 2022. The stock has returned -5% since Iger’s return after a two-year hiatus, compared to the S&P’s positive return of 36%, according to FactSet data. Disney stock’s woes coincide with the broader struggles of traditional media companies, as stocks like Fox (14% return over the past decade), NBCUniversal parent Comcast (83%) and CBS parent Paramount (-78%) have all significantly underperformed the broader market. Shares of streaming leader Netflix have gained more than 800% over the past decade, but the stock has also taken its share of losses and is still trading about 10% below its 2021 high.

Contra

Disney still has plenty of fans on Wall Street, and the three dozen analysts tracked by FactSet have an average price target of $122 on the stock, about 40 percent above the current share price. Rosenblatt analyst Barton Crockett, who cut his price target to $122 from $129 after the earnings release but still recommends Disney as a “buy,” noted the company has a “significant asset.” And according to the price-to-earnings (P/E) ratio, which measures consensus estimates for earnings over the next 12 months compared to the company’s stock price, Disney stock is trading at its cheapest relative level since March 2020. Disney’s P/E of 16.3 is about 35 percent lower than it was in April, suggesting a drop in market confidence in the company’s ability to grow its earnings but also a discount for those who believe in another turnaround.