New drama looms over Disney theme parks ahead of Walt Disney Company (DIS) earnings tomorrow

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Tomorrow, Tuesday 7^th, of May, the Walt Disney Company (DIS) will report their second quarter earnings for 2024.

Of special interest to shareholders will be the company’s ‘Experiences’ business (including its theme parks worldwide).

In a recent interview with The Hollywood Reporter, the Walt Disney Company’s ‘chairman of experiences’ Josh D’Amaro revealed that the company intends to invest an eye-watering $60 billion in reinvigorating and updating its theme parks as a core part of its growth strategy for the next decade or more.¹

The major cash injection into the company’s parks – possibly the largest amount the company has ever outlaid for ‘experiences’ that aren’t a completely new theme park – shows clearly that this is where Disney has decided the future money is – as opposed to, say, new animated feature films being prioritised, or the company’s streaming service.

Bad publicity for Disney parks

The problem with this is that Disney’s theme parks have had a slew of negative press lately.

Walt Disney World Resort, in the US, faced wrath recently for permanently closing its beloved Dino Land U.S.A. experience.

The same park is currently receiving negative attention for its ‘Carousel of Progress’, which ironically has become so outdated that riders are being offended and even leaving mid-experience due to the carousel’s more racially suggestive elements and how a ‘typical American family’ is represented.²

So, how will shareholders react to Disney’s results and outlook tomorrow, within the context of these current headlines?

Also, let’s not forget that serious competition is coming to snap up those disenchanted former Disney park goers. Comcast NBCUniversal is opening its own highly-publicized theme park and resort in 2025, called Universal Epic Universe, to also be based in Orlando, Florida.³

A $32 billion asset – or liability?

According to Statista, Disney’s experiences, consisting mainly of its theme parks, accounts for more than a third of the company’s total revenue and is its second-largest source of income as of 2023, when it brought in $32.6 billion.⁴

Disney’s 2023 year-end results reflected a dip in popularity somewhat, showing that revenue from U.S.A theme parks grew only 9% during the year, while its international revenues grew 55%.

Meanwhile, in Q1 of 2024 results, released by Disney in February, the company’s overall revenue was flat at $23.5 billion – yet its international theme parks in Shanghai and Hong Kong brought in record revenues for the company – while ‘domestic experiences’ in the United States made a 2% loss.

Expectations for tomorrow’s earnings

The Q2 2024 results tomorrow morning will, needless to say, be closely watched.

Analysts are broadly expecting net income to be around $1.97 billion and revenues to be above $22 billion for the quarter – both of these numbers up year-on-year but down quarter-on-quarter.

Specifically, the company’s ‘Experiences’ business is expected to post a moderate 6.7% growth year-on-year to its revenues, which are forecast to come in at about $8.2 billion for the quarter.

After having a crowd-pleasing increase in earnings per share (EPS) rom $1.09 to $1.22 in Q1 of 2024, the company is likely to decrease EPS significantly to around $0.95 per share.

Disney’s earnings are due to be reported tomorrow morning, before US markets open, on the Walt Disney Company website.