Disney’s stock rose on Monday after California signaled that Disneyland and California Adventure could reopen on April 1. Meanwhile, “Raya and The Last Dragon” opened in theaters, but it had less than expected.
X
The long-awaited reopening of the parks occurs after a year of closure. Disney’s Theme parks (DIS) will be able to reopen at 15% capacity once Orange County reaches red / substantial level 2 risk status. Parks may expand to 25% once the county reaches level 3 and 35% at level 4 less restrictive.
The theme park segment has been a major stumbling block to Disney’s profits, while streaming earnings have increased Disney shares.
Other parks like Comcast (CMCSA) of Universal Studios Hollywood and Six Flags Entertainment(SIX) Magic Mountain and SeaWorld EntertainmentSeaWorld San Diego de (SEAS) may also reopen on April 1 if the county in which they are located reaches level 2.
Under the old rules, larger parks like Disneyland would have to wait until Orange County was at level 4, while smaller parks could reopen at level 3. Governor Gavin Newsom’s “Blueprint Refresh” no longer makes that distinction.
Meanwhile, Disney’s launch of the animated film “Raya and the Last Dragon” topped the box office this weekend, raising $ 8.6 million. It opened in 2,045 cinemas, including in New York City, where the cinemas reopened to 25% of capacity. But it did not have as much impact as expected. It was well below Warner Bros. ‘$ 14.1 million “Tom & Jerry” opening.
In addition, “Raya” has not had a major international opening. It made $ 26.2 million globally, including China. But some movie chains refused to show it due to a dispute over the terms of its availability on Disney +. The third Cinemark exhibitor, as well as Harkins and Canada’s Cineplex, blocked the title of their cinemas.
“Raya and the Last Dragon” was available to Disney + subscribers for an extra $ 30. Disney officials did not provide details on how many subscribers paid to watch it on their streaming service. In contrast, “Tom and Jerry” was available for free on HBO Max.
IBD Live: a new tool for daily stock market analysis
Disney Stock
The shares jumped 6% to 201.25 in the stock market today, beating the previous intraday high of 200.60 reached on February 24. Disney shares are extended beyond an 183.50 point purchase on a flat base, according to analysis by the MarketSmith chart. But an aggressive investor or swing trader could interpret Monday’s recovery from a short-term bearish trend as actionable, although with the market outlook still corrected, any purchase would be risky.
Disney shares have an RS rating of 78 out of 99 possible. Its line of relative strength has shown an upward trend since Pfizer (PFE) and Modern (MRNA) announced in November that it had an effective Covid-19 vaccine. The stock has also improved since Disney announced in December a reorganization to reflect its growing focus on its streaming business.
Streaming rivals Netflix (NFLX) fell 1.9% and Apple (AAPL) lost 2.8%, while Six Flags rose 6.8% and Sea World rose 6.4%.
Reopening Spurs’ optimism
Disneyland’s imminent reopening, as well as the recent reopening of cinemas in some of the major markets, make Wall Street optimistic.
“We see this as another step in the right direction, as Disney benefits from the reopening of its theme parks (with Disneyland Paris due to reopen on April 2) and the return to the cinema with the reopening of cinemas recently in New York and San Francisco, “said Alexa Quadrani, an analyst at JPMorgan, in a recent note to investors.
For now, Disneyland is scheduled to host an open-air dinner event with tickets in March, which has been estimated to bring back about 1,000 employees. Although Quadrani does not expect the park to be profitable at 15% capacity, she said the reopening will help offset costs, as Disney has seen in its other parks.
The Disney Parks, Experiences and Products segment lost up to $ 1.9 billion in the fiscal third quarter of 2020. It is on track to break even in the fourth quarter, according to JPMorgan’s projections.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
YOU MIGHT LIKE:
Are Disney shares a purchase now?
Why this IBD tool simplifies the search for the main stocks
Do you want to make quick profits and avoid big losses? Try SwingTrader
Best growth stocks to buy and watch
IBD Digital: Unlock IBD’s premium stock lists, tools and analytics today