When To Sell Disney Stock?

When To Sell Disney Stock: It takes a true emergency for Disney to shutter its parks. On the rare occasion that it has been necessary to close the gates, shutdowns have lasted no more than a couple of days. Aside from September 11, 2001, park closures were limited to a single geographical area, and they primarily resulted from one of the hurricanes that regularly passes through Florida.

The COVID-19 pandemic will long be remembered as an extraordinary period in Disney history, as it marked the first instance of a long-term shutdown of the entire Disney Empire. Hong Kong Disneyland closed at the end of January, Tokyo Disneyland closed at the end of February, and Disneyland Paris, Disney World, and Disneyland USA closed halfway through March.

Disney World and Disneyland USA workers were furloughed beginning April 19th, and the parks have stopped billing their annual passholders. While the company is currently accepting reservations for June 1, 2020, and beyond, many analysts predict that this re-opening date is overly optimistic.

Some have even suggested that the properties will be unable to resume operations until 2021.

The park closures, along with global economic changes, caused dramatic drops in Disney share prices throughout the month of March. This has investors concerned. When is the right time to sell Disney Stock?

The Impact of COVID-19 on the Walt Disney Company 

Even when Disney World in Florida and Disneyland in California do reopen, they will be returning to a far different economic environment.

Business closures and unprecedented job losses mean fewer US visitors, and international travel isn’t expected to rebound for quite some time given current travel bans.

That, in addition to general anxiety about being in crowds and social distancing protocols, suggest that attendance may not fully rebound until a reliable COVID-19 treatment and/or vaccine is available.

This is bad news for the company’s revenues, as Disney’s Parks, Experiences, and Products division accounted for $26.2 billion of its $69.5 billion total revenue in the last year.

Park closures aren’t the only challenge Disney faces during this global health emergency.

A wide variety of other businesses that the company relies on for revenue have ceased operations. For example, movie theaters are closed, resulting in delayed release of Disney films. The highly anticipated live-action Mulan was due out March 27th, but that date has been pushed out to July 24th.

Onward, which was expected to bring in large audiences, came out just a week before theater closures, resulting in substantially lower revenues than it might otherwise have generated.

Disney’s ESPN+ is struggling to attract viewers now that most major sporting events have been cancelled. The main bright spot is Disney’s streaming video services, Hulu and the recently-launched Disney+.

With stay-at-home orders and quarantines keeping 95 percent of Americans and entire populations of other countries in the house, streaming subscriptions have become a must-have.

Disney+ already shattered subscriber projections in its first three months, and analysts are looking forward to updated subscriber numbers when Disney releases its quarterly earnings report in early May.

For new investors, the question is whether Disney is a smart buy. After all, share prices haven’t been this low since 2015. For current investors, the question is when to sell Disney stock. Will it sink further? And if so, will it ever regain lost value?

Will Disney Stock Keep Going Down?

At first glance, the facts are grim. The company has lost about a third of its total value when today’s share prices are compared to the 52-week high of $153.41.

During the market crash in March, Disney stock went as low as $79.07, though it has recovered somewhat since. Generally, analysts are not expecting much in the way of good news when Disney releases its next earnings reports, and projections for the remainder of the year are likely to push stock prices down short-term.

The question is, of course, will those prices stay down, or can Disney rebound?

Is Disney Stock a Good Investment?

The Walt Disney Company has one of the world’s strongest brands, and it owns a wide variety of businesses that lead in their respective industries.

In addition, Disney owns a massive portfolio of valuable intellectual property that cannot be duplicated or matched by any of its competitors.

Disney has long been considered a top-tier blue chip stock. Though the current challenges are already causing revenue loss, which is likely to continue for quite some time, a majority of investors and analysts still consider Disney a good investment.

It has the resources – and the liquidity – to make it through difficult economic times, emerging intact on the other side. The same cannot be said for many of Disney’s competitors across markets.

Does Disney Stock Pay a Dividend?

One of the reasons Disney gets top billing on nearly every must-have stock pick list is its solid dividend history. In 2019, the dividend totaled $1.76 per share – a yield of 1.72 percent and a payout ratio of 16.13 percent.

From 2015 through 2019, dividends have increased regularly. Though there is likely to be a drop in 2020, analysts generally agree that aside from the current crisis, Disney will continue to be a reliable income stock.

Is DIS Stock a Buy or a Sell?

The bottom line is, if you already own Disney stock, now is not the time to sell. While share prices may drop further before gradually climbing, you are more likely to incur losses now than you are if you hold onto your shares for the long haul.

Those that are considering an investment in Disney may want to wait just a bit longer. It is likely that share prices will come down after the May earnings report, and if they do, you can buy at a greater discount.

Even if that drop doesn’t come as expected, prices are unlikely to increase substantially in the near-term, so there is still time to buy low.

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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.