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The Walt Disney Company is facing a significant hit to its stock price target, as Wells Fargo analyst Steven Cahall has reduced it by over $30.
This massive plummet is attributed to a series of challenges plaguing the once-thriving studio, including a string of disappointing box office performances and financial losses in the realm of streaming services.
Cahall’s analysis points to potential difficulties in offloading Disney’s cable and broadcast TV assets, such as ABC, FX, and National Geographic. This predicament is exacerbated by the ongoing trend of consumers cutting ties with traditional cable TV, a shift that signals the possible decline of cable television as we know it.
Disney Gets Stock Price Target Cut by More Than $30 From Wells Fargo Analyst https://t.co/8iD4xKxP5O
— The Hollywood Reporter (@THR) September 5, 2023
Cahall has significantly adjusted Disney’s stock price target, lowering it by a substantial $36, bringing it down to $110 from its previous level of $146.
The Wells Fargo analyst said, “Disney has not been consistently producing hits recently, and enhancing their content lineup is a time-consuming process. This is likely to have adverse effects on Disney’s box office earnings and Disney+ subscriptions, particularly in the face of upcoming price hikes.”
Disney has encountered an unprecedented series of box office disappointments this year, including underwhelming performances from films like The Little Mermaid, Indiana Jones and the Dial of Destiny, Elemental, and Haunted Mansion.
On the streaming front, Disney+ recently disclosed a loss of 300,000 domestic subscribers for the most recent quarter, a concerning development for a relatively young streaming service that should be expanding its customer base.
Disney has decided to implement a sweeping increase in streaming prices, a move that has left some fans feeling alienated. The monthly subscription cost for Disney+ is set to surge from $10.99 to $13.99, marking a substantial 27 percent hike.
In the span of less than two years, Disney+ subscribers will have witnessed their monthly bills escalate by a total of 75 percent. These price adjustments are scheduled to take effect in October.
Earlier this year, Disney’s CEO, Bob Iger, strongly hinted at the possibility of divesting many of the company’s TV assets, which he referred to as “non-core” to Disney’s primary operations. This strategic decision is a response to the ongoing trend of cord-cutting, which has had a profound impact on the traditional cable industry.
The potential sale of formerly robust channels such as ABC and FX may prove to be a challenging task. The Wells Fargo analyst expressed doubts, stating, “Disney won’t be able to successfully divest non-core linear assets.” Additionally, the transition of ESPN to a streaming format is likely to encounter obstacles that could impact the company’s earnings.
Despite these challenges, Wells Fargo has maintained its “overweight” rating for Disney, suggesting that investors are already well aware of the unfavorable developments.
As previously reported, Disney has been grappling with a multitude of negative news cycles, including financial difficulties that have resulted in the layoffs of 7,000 employees.
The company has also been in culture wars over its stance on promoting LGBTQ themes in content aimed at children.