Will Disney Stock Have a Bud Light Moment?

Disney (NYSE: DIS) is a beloved brand that’s had an immense cultural impact over the past century. It may have started with a mouse, but the company now includes the Star Wars, Marvel, and Pixar brands among others, and everything from streaming services to theme parks.

But Disney is no stranger to controversy, including recent highly-publicized battles with Florida Governor Ron Desantis. But it’s another controversy that’s gotten investors concerned that DIS shares could suffer the same fate that Anheuser-Busch (BUD) stock suffered earlier this year.

The Bud Light controversy stemmed from the company’s decision to partner with trans influencer Dylan Mulvaney earlier this year. After the partnership went viral, conservative groups boycotted the brand and sent shares plummeting from around $66 in early May to $53.40 by the end of the month.

So will Disney stock have a Bud Light moment?

What Did Disney Do?

Disney just announced a partnership with Seann Altman, who identifies as a male but sometimes wears female clothing. Altman, a gender-fluid TikTok influencer, has hundreds of thousands of followers on social media.

While the partnership itself might have been enough to anger some conservative groups, it also sparked outrage that Altman was brought in to promote a line of girls clothing through the company’s Disney Style brand.

The TikToker shared photos of himself dressed as Minnie Mouse in a post that got millions of views and outraged many people who threatened to boycott the company. That has many investors concerned that the backlash could affect Disney’s bottom line.

Disney’s Recent Controversies

The Seann Altman controversy is just the most recent in a string of recent stories about Disney that have made national news. The company’s support of LGBTQ+ issues has drawn the ire of conservative governor Ron Desantis, and Disney has had a series of battles in the Florida legislature.

It started with the company’s criticism of Florida’s recent passage of the Parents Rights in Education Act, also known as the “Don’t Say Gay” bill. The law is designed to keep educators from instructing students on sexual orientation or gender identity in early grades.

Disney issued a clear statement that it intended to see the law overturned, and it donated money to an ad campaign criticizing the legislation. Desantis retaliated by threatening to eliminate Disney’s special tax district that has been in effect for decades for the Disney World property in Orlando, FL. 

While that isn’t likely to happen, it’s still concerning for investors who worry that the company’s political views could alienate customers.

Has Disney Stock Been Affected?

Disney stock has dropped 15.8% over the past 6 months, but there are a number of factors that have caused that decline. The company just reported its 2nd quarter of 2023 earnings and even though revenue increased 4% year-over-year, Disney missed analysts’ expectations by 0.89%

Even more concerning was the fact that Disney posted a net loss of $460 million after a long string of positive quarters. The company also reported a 7.4% decline in Disney+ subscribers. That led the company to announce it’s raising its rates for the streaming service and doing a Netflix-style crackdown on password sharing.

Disney did see a 13% increase in revenue from its Parks, Experiences, and Products segment, but that largely came from the company’s international parks. In the US, and especially in Florida, park attendance and hotel room purchases were down.

How Do Analysts Rate Disney Stock?

After all the recent controversies and earnings concerns, most analysts still believe that DIS will bounce back. Out of 30 analysts who’ve rated Disney stock, 20 rate the stock as a buy at this price point, with two analysts predicting Disney shares will overperform the market. 

The most bullish forecast has the stock hitting $146 over the next year, a nearly 70% increase from where the stock trades now. But the consensus forecast has DIS shares increasing 27.9% to $110 over the next 52 weeks.

Eight analysts rate the stock as a hold, and only two believe you should sell DIS stock right now. The most bearish forecast has the stock dropping 24.4% to $65 over the next year.

Will Disney Stock Have a Bud Light Moment?

The analysts are still in Disney’s corner because the company is in a very different position from Anheuser-Busch. Disney has had a long history of backing the LGBTQ+ community, including selling pride merchandise at its stores and incorporating LGBTQ+ themes and characters into its movies.

Bud Light did not have that history, and its association with a trans influencer came as a surprise to its customers. But there’s another difference between Bud Light and Disney: replaceability.

It’s much easier for buyers to purchase another light beer with a similar taste to Bud Light at the bar or the store. It’s much harder to replace the Disney World experience or stop watching Indiana Jones or Moana. That’s why Disney is in a better position to weather a boycott, should it arise.

The stock may still continue its downward trend over the short term as Disney restructures its business model, but the company’s brands are too strong to keep it down long-term.

---

The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.