Disney Stock Leaps To New All-Time High As Lagging Unit Gets Big Boost


Disney stock gapped up Monday after California signaled that Disneyland and California Adventure can reopen April 1. Meanwhile, “Raya and The Last Dragon” opened in theaters but took in less than expected.


The much-anticipated reopening of parks comes after a year of closure. Disney’s (DIS) theme parks will be allowed to reopen at 15% capacity once Orange County reaches the red/substantial tier 2 risk status. The parks can expand to 25% once the county achieves tier 3 and 35% in the least-restrictive tier 4.

The theme parks segment has been a major drag on Disney earnings, while streaming gains have powered Disney stock higher.

Other parks like Comcast (CMCSA)-owned Universal Studios Hollywood and Six Flags Entertainment‘s (SIX) Magic Mountain and SeaWorld Entertainment‘s (SEAS) SeaWorld San Diego also can reopen as early as April 1 if the county they are located in reaches tier 2.

Under the old rules, larger parks like Disneyland would have had to wait until Orange County was in the tier 4, while smaller parks could reopen in tier 3. Gov. Gavin Newsom’s “Blueprint Refresh” no longer makes that distinction.

Meanwhile, Disney’s release of the animated movie “Raya and the Last Dragon” led the box office this weekend, taking in $8.6 million. It premiered at 2,045 theaters, including in New York City where theaters reopened to 25% capacity. But it did not make as big a splash as expected. It was well below Warner Bros.’ “Tom & Jerry” $14.1 million opening.

In addition, “Raya” did not have a wide international opening. It made $26.2 million globally, including China. But some movie chains refused to show the film due to a dispute over the terms of its availability on Disney+. No. 3 exhibitor Cinemark, as well as Harkins and Canada’s Cineplex, blocked the title from its theaters.

“Raya and the Last Dragon” was available to Disney+ subscribers for an extra $30. Disney officials did not provide details about how many subscribers paid to watch it on its 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

Shares jumped 6% to 201.25 on the stock market today, topping the prior all-time intraday high of 200.60 reached on Feb. 24. Disney stock is extended past a buy point of 183.50 from a flat base, according to MarketSmith chart analysis. But an aggressive investor or swing trader could interpret Monday’s bounce off a short-term downtrend as actionable, though with the market outlook still in correction any buys would be risky.

Disney stock has an RS Rating of 78 out of a possible 99. Its relative strength line has been trending upward since Pfizer (PFE) and Moderna (MRNA) announced in November that they had an effective Covid-19 vaccine. The stock has also improved since Disney announced in December a reorganization to reflect its increasing focus on its streaming business.

Streaming rivals Netflix (NFLX) fell 1.9% and Apple (AAPL) lost 2.8%, while Six Flags jumped 6.8% and Sea World rallied 6.4%.

Reopening Spurs Optimism

The imminent reopening of Disneyland as well as the recent reopening of theaters in some 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 expected to reopen on April 2), and the return to theatrical moviegoing with the reopening of theaters recently in NYC and San Francisco,” said JPMorgan analyst Alexa Quadrani in recent note to investors.

For now, Disneyland is slated to hold a ticketed outdoor dining event in March, which was estimated to bring back about 1,000 employees. While Quadrani doesn’t expect the park to be profitable at 15% capacity, she said the reopening will help offset costs as Disney has seen at its other parks.

Disney’s Parks, Experiences & Products segment lost as much as $1.9 billion in fiscal Q3 2020. It’s on track to break even by the fourth quarter, by JPMorgan’s projections.

Please follow Adelia Cellini Linecker on Twitter @IBD_Adelia.


Is Disney Stock A Buy Right Now?

Why This IBD Tool Simplifies The Search For Top Stocks

Want To Get 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 Analysis Today