The Walt Disney stock price plunged 2% after reporting a massive 91% year over year profit drop for the March quarter as COVID-19 cost as much as $1.4bn. Its parks business hit harder due to the lockdowns, resulting in a more than a billion in operating loss for the March quarter. It’s all twelve theme parks around the globe remained closed during the first quarter.
However, the company plan to reopen its Shanghai Park from the next week with new protocols that include masked guests, no more than 30% capacity, and temperature checks at the gate.
“We’re looking at all of our locations and how best to begin the reopening process, including a gradual reopening and/or partial reopening of certain locations,” she writes. “For example, the opening of retail and dining locations prior to the opening of our theme parks.”
On the positive side, Disney’s revenue increased 21% year over year in the first quarter to $18bn, topping analysts’ estimates for $17.5bn. The revenue growth is driven by higher revenue from media networks and a few billion in new DTC/International revenues. Its park revenue declined 10% year over year in the March quarter.
In the wake of slower demand and higher cash burn rate due to pandemic, the company announced to forgo its first-half dividends, which would help in saving almost $1.6bn.
The investors reacted negatively to the dividend suspension as the Walt Disney stock price extended the downtrend. The Walt Disney stock is currently trading around $100, down from the price of $112 at the beginning of this month and down substantially from $153 that it had hit at the end of last year.
Although its parks business is likely to report lower revenues and big losses in the following quarter, its media network and Direct-to-Consumer & International segments are likely to remain the bright spot ahead.