Jim Cramer, host of Mad Money on CNBC and head of the CNBC Investing Club, called the Walt Disney Co. (NYSE: DIS) a “hobbled company with a suboptimal balance sheet” on Twitter (TWTR). Nonetheless, he says Disney’s got a sticky lifetime customer base.
Following Disney’s solid second-quarter beat, Cramer took to Twitter to share his thoughts on the stock. The investment pundit believes that Disney’s balance sheet is not “good enough” in the current macroeconomic backdrop. The reason for the weakness, he says, is the “ill-advised Fox Buy.”
The Walt Disney Co. acquired 21st Century Fox for $71.3 billion, way back in March 2019. Cramer believes this acquisition was not right and has dug a hole in Disney’s pockets. Further, he believes the cost of acquiring and consolidating Fox is still lingering on the company’s performance and “is not talked about enough by the analysts.”
“It was one of the worst acquisitions I’ve ever seen! They just got had, “he added. The decision destroyed a “gigantic amount of value” for Disney.
Moreover, Cramer even quoted analysts as being mistaken to think that the macroeconomic situation would cause Disney’s theme park business to slow down. In fact, its theme parks are drawing huge crowds, making it “impossible to even get in line to get tickets.”
Meanwhile, the Twitterati did not agree with Cramer’s thoughts on Disney’s acquisition of Fox. Respondents noted that buying Fox added a much-needed boost to Disney’s offerings of strong franchisees like Predator.
People even slammed Cramer for his criticism of Disney after only praising the entertainment giant the day before. Only a handful of people agreed that Disney’s movies and online streaming content were losing sheen to competitors.
Most importantly, people are worried about subscriber loss from the 40% increase in rates for ad-free Disney+ and Hulu plans, which the company plans to implement soon. Furthermore, the company has warned that if demand remains high, it may raise prices at its theme parks.
What was Disney’s Highest Stock Price?
Disney’s highest price to date was $201.91 on March 8, 2021. The shares are currently trading almost 71% lower than the five-year high and around 59% below their 52-week high of $187.58.
On TipRanks, DIS stock has a Moderate Buy consensus rating based on 18 Buys and seven Holds. The average Walt Disney price target of $136.50 implies almost 16% upside potential to current levels. Meanwhile, its stock has lost 24.9% so far this year.