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  • Citigroup Downgrades Disney Stock on Theme Park Concerns

    Citing negative economic trends fueled by increased energy costs, reduced consumer spending and the faltering housing market, Citigroup downgraded its opinion on Walt Disney Company stock from "hold" to "sell."

    Disney shares dropped 1.9% on the news and were trading at $28.80 at market close.

    Citigroup analyst Jason Bazinet noted while there was nothing fundamentally wrong with how Disney conducted business, "Disney's strategy and strong execution may simply get overshadowed by macroeconomic forces. That is, as energy costs remain stubbornly high, the housing market falters, and equity values pull back, we think it's only natural for consumer spending to slow."

    In a response rarely made by companies following analyst reports, Disney CFO Thomas Stagg said in a prepared statement, "Thus far, we are pleased with the pace of business at our parks, especially given the fact that we had record attendance at our domestic parks last year."

    Source: MarketWatch
    Last edited by disneytim; 01-29-2008, 08:59 PM.
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  • #2
    Re: Citigroup Downgrades Disney Stock on Theme Park Concerns

    I believe Bazinet said the same thing last year or 2 years ago and he was totally wrong then. I guess if you keep saying the same thing over and over it will eventually become true.

    With the stock in the high $20's it is really the time to buy.

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    • #3
      Re: Citigroup Downgrades Disney Stock on Theme Park Concerns

      not only that, but wouldnt we have heard something on the news(unless there was and I missed it) from either Staggs, or Iger about the situation?

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      • #4
        Re: Citigroup Downgrades Disney Stock on Theme Park Concerns

        This is just another case of an investment group wanting to flex it's muscles so it can see how important it is.

        "See? We made the stock price move just by making a wild prediction."

        Investment groups are a finicky bunch and sometimes weild way too much influence on stocks.
        ______________________________________________
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        • #5
          Re: Citigroup Downgrades Disney Stock on Theme Park Concerns

          Originally posted by disneyfan07 View Post
          not only that, but wouldnt we have heard something on the news(unless there was and I missed it) from either Staggs, or Iger about the situation?
          Staggs has addressed this and the Disney stock has been upgraded to 'buy.'

          Source: Forbes
          "If you build it right, they will come." - Bob Iger

          "I'm not a literary person. As far as realism is concerned, you can find dirt anyplace you look for it. I'm one of those optimists. There's always a rainbow." - Walt Disney



          "I don't care about critics. Critics take themselves too seriously. They think the only way to be noticed and to be the smart guy is to pick and find fault with things. It's the public I'm making pictures for." - Walt Disney

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          • #6
            Re: Citigroup Downgrades Disney Stock on Theme Park Concerns

            And, these usually cause an overreaction, and, in this case, it is very short-term, time-wise.
            I mean, when the dollar drops, it becomes cheaper for foreigners to come here to visit. So, where will they visit?
            And, recessions don't last forever, and DIS isn't leveraged to the hilt.

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            • #7
              Re: Citigroup Downgrades Disney Stock on Theme Park Concerns

              I think Citigroup failed to acknowledge that the entire stock market took a plunge....it wasn't just Disney. I love how they say that "Well, Disney isn't really doing anything wrong, but we think they're going to fail, anyways." What a weird prediction.
              "Keep Moving Forward."

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              • #8
                Re: Citigroup Downgrades Disney Stock on Theme Park Concerns

                All of the above, plus the fact that the Attractions Industry as a whole is much less predictable than other markets... there have been many cases where the gurus have predicted low entertainment spending due to less "expendable income," when the opposite has happened (hey, stressed-out people need to splurge on a break now and then).

                And let's not forget the impending tax rebates. While not fortunes by any means, these will offset a lot of vacation costs that families normally couldn't have handled. Just in time for summer...
                Remember: you cannot spell "manslaughter" without "laughter."

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                • #9
                  Re: Citigroup Downgrades Disney Stock on Theme Park Concerns

                  A recession might actually be good for Disneyland. People who might otherwise have traveled outside of California are more likely to stay home and just take the kids to Disneyland instead. With Toy Story Midway Mania opening in the Spring along with a new parade, Disneyland Resort is looking toward a big year.

                  A recession might soften things for Florida, but unless it is a deep depression, it shouldn't be too bad. The weak dollar will encourage foreigners to travel to the US, but a pull back in domestic travel will likely bring attendance down a bit. But I doubt that it is anything for Disney to worry about yet.

                  If the recession lasts over a year or the job market crashes, then all bets are off.
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                  • #10
                    Re: Citigroup Downgrades Disney Stock on Theme Park Concerns

                    It may well be that the downgrade has more to do with how the WGA and probable SAG strikes will effect the studioside of the business. Not only does Disney produce a whole raft of shows and movies, but it has a large property rental and craft services business as well. Also depending on how well Disney has been doing at buying currency protection instruments the continual weak dollar could have a large effect of Disney.
                    Originally posted by SummerInFL
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                    • #11
                      Re: Citigroup Downgrades Disney Stock on Theme Park Concerns

                      What I find funny is that Disney's stock has gone up $4 since Citigroup "downgraded" its status. That must do wonders for Citigroup's reputation. <_<
                      "Keep Moving Forward."

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                      • #12
                        Re: Citigroup Downgrades Disney Stock on Theme Park Concerns

                        They must be, as Liberace once said, crying all the way to the bank.

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                        • #13
                          Re: Citigroup Downgrades Disney Stock on Theme Park Concerns

                          after listening to that shareholder meeting with its lack of exciting news and plants in the audiance during the Q & A...I would downgrade disney stock too.

                          I mean look we got an economic recession beginning that will not only affect the U.S. but soon the world too. We have Harry Potter land opening at Universal Florida within the next 3 years and the tourist market in general is becoming increasingly competive for your money. So what does disney do to counter?

                          Cheap marketing schemes and lame cartoon tie-ins.

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                          • #14
                            Re: Citigroup Downgrades Disney Stock on Theme Park Concerns

                            Originally posted by sediment View Post
                            I mean, when the dollar drops, it becomes cheaper for foreigners to come here to visit.
                            "When the dollar drops"? In case you haven't noticed, it's been in mid-plummet for several years now and shows no signs of slowing down.

                            2004:
                            http://www.pbs.org/newshour/bb/econo...llar_12-2.html
                            http://www.ecommercetimes.com/story/38826.html
                            http://nymag.com/nymetro/news/bizfin...tomline/10657/
                            http://www.npr.org/templates/story/s...toryId=4186041

                            2005:
                            http://www.mises.org/story/1759
                            http://www.inthesetimes.com/article/1879/

                            2006:
                            http://news.bbc.co.uk/2/hi/business/4772049.stm
                            http://money.cnn.com/2006/12/01/news...tune/index.htm

                            2007:
                            http://www.msnbc.msn.com/id/18383804/
                            http://www.csmonitor.com/2007/0924/p01s05-usec.html
                            http://news.bbc.co.uk/2/hi/business/6291090.stm
                            http://www.alternet.org/workplace/67307/
                            http://weblogs.chicagotribune.com/ne...enback_ha.html
                            http://money.cnn.com/2007/09/21/mark...llar/index.htm
                            http://www.washingtonpost.com/wp-dyn...111201075.html
                            http://www.nytimes.com/2007/12/02/business/02view.html

                            2008:
                            http://www.currencytrading.net/2008/...alling-dollar/
                            http://www.businessweek.com/globalbi...310_608242.htm

                            Originally posted by sediment View Post
                            So, where will they visit?
                            If they're Europeans, they could visit Disneyland Paris. If they're Japanese, they could visit Tokyo Disneyland. If they're Chinese, they could visit Hong Kong Disneyland. Or, if they're from other countries, they could visit any of those 3 other non-U.S. Disney parks.

                            Or, they could avoid theme parks altogether. If Disney really wanted to hedge its bets the theme park division would buy the Hilton Hotel chain (but that's not going to happen).

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