The Walt Disney Company continues to face financial challenges as it struggles to recover from recent setbacks. A prominent firm downgraded the company’s stock this week due to ongoing issues at Disney theme parks, once the organization’s most reliable revenue-generating division. Shares of Disney dropped more than 2% on Tuesday following the downgrade by Raymond James analysts, who cited “parks under pressure” and a “questionable consumer outlook” as demand slows.
The current economic climate, marked by record-high prices, is making it difficult for consumers to justify non-essential spending like expensive vacations. Disney confirmed this trend in its latest quarterly earnings report released in August, with executives specifically citing inflation when stating that the “Experiences” division – which includes theme parks, cruise ships, and other live entertainment offerings – will see a decline in income over the next few quarters.
Disney’s chief financial officer, Hugh Johnston, acknowledged the impact of inflation on lower-income consumers who are cutting back on visits to Disney parks. For the most recent quarter, Disney reported that its Experiences operating income fell 6. In past years, Disney theme parks had been a reliable source of revenue for middle and working class American families, many of whom saved up for years to afford an expensive trip. However, under the current administration, consumer prices have risen significantly, forcing many families to cut back on spending in order to cover essential expenses such as groceries, rent, and insurance.
This latest setback comes in the wake of more layoffs at Disney. Last week, the company reportedly eliminated an estimated 300 corporate-level jobs in the U.S., affecting multiple divisions including legal, human resources, finance, and communications. Disney let go of a staggering 7,000 jobs worldwide last year, with CEO Bob Iger promising an additional $2 billion in cost savings.
In addition to these challenges, Disney has faced criticism for producing expensive flops for its streaming services. The most recent example is “The Acolyte,” a woke Star Wars series that was canceled after just one season following heavy promotion and a budget reported to be $231 million. The show featured a coven of lesbian witches, as well as a transgender actor in a prominent role. Its creator recently warned Star Wars fans who engage in “bigotry, racism, or hate speech,” claiming that anyone who does so is not a genuine fan of the franchise.