Disney stock is at its lowest price since 2014

Disney stock is at its lowest price since 2014
We are going to explore the headwinds that Disney is facing, and why I think it is a high risk company that is going to continue to face significant challenges going forward.
Disney is a bloated conglomerate that has grown too large and unwieldy to manage.
Disney can be understood as two businesses:
1) Disney Media and Entertainment Distribution (DMED)
2) Disney Parks, Experiences and Products (DPEP)
Disney has significant problems across all its businesses. Linear-TV is in decline. Streaming is a complicated industry, and not as profitable as everyone once thought. The film / studio unit is underperforming. While the parks have had some degree of success, they are not as successful as you would think given that we are past covid.
While most of Disney’s revenues come from media and entertainment, most of the profits come from parks, cruises, and products. If they can address profitability in media, that may be enough to change the direction of the company as a whole. However, I’m not sure there is a scenario where the traditional TV segment becomes significantly more profitable.
Disney is losing money because it is overpaying and underdelivering movies while many movie theaters are going out of business.
Disney hasn’t paid a dividend since 2019.
The Price-to-earnings ratio is still very high. It is about 70 currently versus Netflix at 44,
Movies:
The budgets for films are too high, and the quality is mixed. Everyone from Netflix, DreamWorks, and Sony are running circles around Disney in terms of animation. For example Puss in Boots did much better than Lightyear. The success of the Mario movie shows there is still a market for animation in movie theaters.
ESPN:
ESPN overpaid for sports.
ESPN must still pay the NFL, NBA, and other sports leagues despite cable cutting because of their current contractual agreements. ESPN, and the model as a whole, can not support the leagues’ lofty ambitions and demands any longer.
The deals ESPN made were atrocious and it will take time for them to expire and renegotiate them.
Carriage fees are another significant issue that deserve an entire video in their own right, especially how they pertain to Disney.
Streaming:
Disney spend too much money on content including FOX assets.
There are rumors that Disney will cut its investment into Disney+.
Disney may find some success in licensing its content to other streaming services.
Theme Parks:
Going to a Disney park is a once in a lifetime experience. Once you have done it, and are out a lot of money, and maybe didn’t have the best experience, you are not likely to go back.
There is only so much profit the theme parks can generate.
While I think we all agree that there are is still a lot of attendance at the parks, I would argue the quality has declined. Talking to a coworker that took his family to the Orlando park, I could not believe how much money he spent at Disney. Disney is competing against Universal Orlando which has been adding new attractions, has cheaper ticket prices, and is cheaper.
Television:
There was a time when television and parks were the main profit drivers. Now, television is losing money each quarter, and so is the movie business. Disney+ is also not earning large margins.
I do not really see any prospects for growth. In addition, the overall business model is risky. Just a few bad films can sink the profitability of the media division.
Conclusion:
In conclusion, there are numerous issues with Disney as a company including earnings and financial performance, market trends and competition, especially regarding animation, its debt load, which you could make an argument the company will not have a lot of difficulty servicing, but is significant nonetheless, management issues, valuation and dividend concerns, and quality issues especially with its films. I think Disney could continue to go lower and I just do not see any films that I’m excited for from them or a coherent argument for a turn around.
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