The Disney Park Indicator: an update

Back in early May , FT Alphaville posited there’s one indicator above all that we should pay attention to when it comes to measuring whether we’ve returned to normality: Disney’s parks business.

You know the one. It involves a relatively affluent family paying an often ludicrous amount of money to fly to Tokyo, Hong Kong, Paris, California or Florida to visit one of the Mouse Empire’s amusement parks to ride attractions such as Pirates of the Caribbean, Thunder Mountain Railroad and Splash Mountain. (Mountains are a recurring theme, oddly.)

The idea is simple: once consumers have returned to feeling comfortable enough to travel, stay in a hotel, queue , scream at a stranger’s face on a rollercoaster and pony up for a large discretionary expense, you can be rest assured the pandemic is over.

So what of Disney’s parks business six months later?

The good news is, Disney’s parks have reopened with limited capacity. Yet, on a financial basis, it’s not looking too great. Disney reported its fourth-quarter results last Thursday, and here’s how its annual and quarterly numbers looked for parks segment:

Yeesh, so year-on-year parks revenue was down 61 per cent for the quarter, and for the fiscal year its down a slightly less nasty 37 per cent. Normality still seems a way off.

But for how long? Given the company laid off 28,000 employees in its US theme parks business in September, it’s fair to speculate that Disney believe we won’t be out of the woods for some time yet.

For a view past a year however, we turn to the boffins at research shop MoffettNathanson who, as we’ve come to expect, followed up Disney’s results with its own take on Friday.

It had already been a good week for the stock after the Pfizer/ BioNTech vaccine results hit the tape Monday — boosting its share price 12 per cent on that day alone. But the results also bought cheer to investors with Disney revealing that it lured 73.7m subscribers to its new premium streaming service, Disney+. The shares rose a touch over 2 per cent the next trading day.

What caught our eye, however, wasn’t the user numbers but MoffettNathanson’s estimates for Disney’s park business.

Here’s the relevant table:

Take a close look, and you might note that you add together the shop’s forecasts for both Disney’s international and domestic parks business, it will only be in 2024 that it tops 2019’s revenue figure of $21.6bn.

Five whole years.

Given the vaccine news just hitting the tape as we type, that strikes us as a touch pessimistic.

Related Links: Introducing, the Disney Park Indicator — FT Alphaville