Business

Disney Stock Hits 9-Year Low: Here’s How Its Performance Compares To Peers

August 30, 2023

Topline

Disney shares are trading at their lowest level in nearly a decade thanks to investors’ wavering belief in the company’s magic as its long-term stock performance dwarfs many other notable similar stocks.

Mickey Mouse hasn’t had a lot of friends on Wall Street lately.

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Key Facts

Disney traded at about $84 Monday, hovering at its lowest level since October 2014, the last time they closed below $84 until last Thursday.

Since October 2014, Disney’s 12% return compares to a roughly 130% jump for the S&P 500, while Disney’s 25% loss over the last five years and 55% gain over the last ten years compares to the S&P’s 53% and 170% respective gains over the periods, according to FactSet data.

Disney, whose earnings before interest, taxes, depreciation and amortization dwindled from $17.4 billion in 2018 to $11.5 billion last year, has suffered from a broad decline in profitability in linear television: Disney’s 55% return over the last decade compares favorably to similarly exposed stocks like CBS parent Paramount (down 57%) and HBO and CNN parent Warner Bros. Discovery (down 68%).

Still, Disney is the 78th-worst performing stock over the last ten years out of the 468 S&P companies that have been publicly traded during the period.

In the entertainment sector, Netflix’s more than 900% gain over the last decade dwarfs Disney’s, while other fellow longtime large-cap stocks like Apple, Microsoft, Amazon, Berkshire Hathaway and Coca-Cola have all outperformed Disney.

Disney, whose $178 billion market capitalization made it the 31st-most-valuable company in the world in 2015, is now the 69th-largest firm, with a market cap of $154 billion.

Big Number

A $1,000 investment in Disney at the turn of millennium would be worth about $4,200 today, while the same commitment to the S&P would be worth $5,000. Those with enough foresight to put $1,000 into Apple or Nvidia would now have about $1,000,000 and $300,000, respectively.

Key Background

Disney shares are down 5% year-to-date, moving against broader market gains as Wall Street reacted sourly to a slip in subscribers for the firm’s paid Disney+ streaming service, which lost $512 million last quarter. The slump comes after Disney posted its worst stock return in 48 years in 2022, shedding 44% as investors largely grew fed up with mounting streaming losses as the economic outlook took a turn for the worse. Shares briefly rallied late last year after Disney announced the return of longtime CEO Bob Iger, but the stock is still down 8% since the Iger news.

What To Watch For

If Disney decides to offload its linear television assets. Iger told CNBC last month its segment, including ABC and ESPN, “may not be core to Disney.” Disney’s media and entertainment unit has an implied enterprise value of $49 billion, according to MoffettNathanson analysis earlier this month.

Crucial Quote

“Mickey is going on a diet and losing weight,” Daiwa analyst Jonathan Kees wrote in a note to clients earlier this month. With the Iger-led recalibration on bottom lines, Disney will be a “survivor and winner in the streaming wars,” Kees proclaimed.