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The COVID-19 is arguably the worst thing that’s happened to Disney (NYSE: DIS) in decades. Disney and its inventory have suffered because theme parks and theaters have had to operate at reduced capacity (if they can open).
In addition to this headwind, tense dating between US governments and the US governments is a strong one. But it’s not the first time And China has sown uncertainty in a region of key expansion for the company, creating some other challenge for management. pose a greater risk to this media inventory than COVID-19?
Let’s take a closer look at any of the questions and see if we can get an answer.
There’s nothing Mickey Mouse in the devastation inflicted on Disney through COVID-19. In the last quarter, revenue fell 42% from the previous year. The company’s net source of revenue also turned negative, as it reported a loss of $2. 61 in diluted profits. consistent with consistent percentage. This led to the suspension of the annual dividend of $1. 76 consistent with consistent percentage in May.
Most of the proceeds came from two of Disney’s 4 divisions: Parks, Experiments, and Products, which manages theme parks and Disney vacations, recorded an 85% drop in profits; revenue also fell by 55% for studio entertainment, which relies heavily on film attendance.
However, this caused a deep devastation in the company’s profits, the recovery had begun, almost all theme parks have been reopened at least partially, in addition, some cinemas have allowed a reduced capacity of consumers to return.
A recent increase in coronavirus instances may oppose or at least put recovery on hold; However, despite all the disturbances caused by coronavirus, its effects are deeper but probably in the shorter term. Either contagion will take its course, or science will find a remedy that will allow society to return to normal.
By contrast, similar upheavals to Disney’s China appointments are likely to be much less dramatic, which has so far impeded the expansion of Disney’s earnings in Asia.
Officially, Disney has downplayed all Disorders similar to China’s. China won a small mention in last year’s annual report and none in last call on results.
However, Disney’s conciliatory relationship with the People’s Republic of China is at the heart of the concerns, he was convicted through Attorney General William Barr. Disney also faced a backlash over Mulan’s filming on the Chinese territory of Xinjiang, a site of alleged human rights. ESPN’s control has been criticized in the afterlife for discouraging staff from publicly discussing the NBA’s tense dating with China following comments on Hong Kong.
This can be problematic as Disney has turned to China for much of its long-term expansion. Asia accounted for only about 11% of revenue in 2019. However, China is home to two Disney resorts. 1. 4 billion other people in the country can drive expansion in the coming years.
Disney already serves 165 countries with its programming, bringing the corporate to a saturation point in much of the world, so if it continues to expand in China, it is not known where it would place comparable expansion opportunities.
Moreover, the volatile state of U. S. government relations has been the only one in the world. But it’s not the first time With Beijing it can potentially be Disney’s business in China, which is doubtful because of the upcoming presidential election.
President Donald Trump has adopted a more difficult line with the Chinese government than previous administrations: it began and has since intensified the industry’s war with China.
If Biden wins the election, some will stick to the example of former President Barack Obama, who called the United States and China “the ultimate vital bilateral dating of the 21st century. “
But China is facing human rights disorders that didn’t exist eight years ago, which may force Biden to take a more difficult stance on China than Obama. Regardless of the final results of the election, Disney investors keep an eye on the US state. U. S. -Relations with China.
Investors cannot fully forget a death imaginable through a thousand denominations if Disney suffers an additional backlash over its relationship with China. Moreover, if China’s appointments with the US government were to be dated to china, china’sBut it’s not the first time They are irreparably damaged, may diminish or even end Disney’s presence in the Chinese market.
However, the transparent and existing danger of COVID-19 is more harmful. Coronavirus cases have increased in recent weeks. This means that partial blockages are likely to continue until 2021, resulting in billions of dollars in additional media earnings losses. Giant.
In addition, despite all the demanding situations that Disney shares face with COVID-19, it is still trading at an expected P/E ratio of 50. Profits increased by about 10% between 2017 and 2019. valuation, especially if the company continues to delay reopening.
While Disney will likely face China-like disorders during a longer era, the pandemic remains a much larger challenge.