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- Disney stock is down 45% this year and on track for its worst annual performance since 1974.
- The shares have been hit by pandemic disruptions, management issues, and the wider market downturn.
- The media giant’s shares are trading close to an eight-year low.
Disney stock has plunged 45% this year, leaving it poised to deliver its worst annual performance in nearly five decades, as a profusion of challenges continues to bedevil the media giant.
Shares of Disney closed almost 5% lower Monday, after the long-awaited “Avatar: The Way of Water” had a disappointing opening weekend in movie theaters.
The stock is now trading at 2014 levels on a split-adjusted basis, and remains on track for its largest yearly decline since 1974, according to CNBC. The painful selloff has erased about $200 billion from Disney’s market capitalization since March 2021.
Disney’s business stretches from blockbuster movies to TV shows, cable channels, theme parks, resorts, cruises, retail stores, video games, and streaming entertainment. Unsurprisingly, it was hit hard by the travel restrictions, production disruptions, and closures of cinemas, stores, and entertainment venues seen during the COVID-19 pandemic.
While most of its operations have now reopened, they haven’t fully recovered yet.
One bright spot has been Disney Plus, which has grown its paid subscribers from about 27 million at the end of 2019 to 164 million as of October 1. Yet investors have balked at the streaming service’s rising costs, which fueled a hefty $1.5 billion operating loss in Disney’s streaming division last quarter.
Disney stock has also been caught up in a wider market downturn.
Inflation has surged to 40-year highs this year, spurring the Federal Reserve to hike interest rates from virtually zero in March to over 4% today, in a bid to slow the pace of price increases.
However, rising prices and borrowing costs are queezing consumers and businesses. They’re also dragging down asset prices, and fanning fears of a recession and slump in company earnings next year.
The entertainment titan weathered some bad publicity during Bob Chapek’s tenure as CEO. However, Bob Iger — who masterminded Disney’s acquisitions of Marvel, Pixar, and Lucasfilm — took back the company’s reins in November, sparking an uplift in its stock price and revitalizing investors’ hopes of a turnaround.
