It’s another dismal day for Disney (NYSE:DIS), as the entertainment giant announced plans to double its investment in its theme parks. The move caused investors to pack up and run off like Dumbo’s circus in the night, and Disney shares were down over 3.5% in Tuesday afternoon’s trading.
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Disney planned to hike its investment in its theme parks—the Parks, Experiences, and Products division, specifically—to $60 billion over the next 10 years. That’s right around double what it was for the previous 10-year period. Among other points, this investment will go toward “…expanding and enhancing domestic and international parks and cruise line capacity.” Disney noted that its overall financial condition is “strong” and that it not only has the cash on hand to spend like no tomorrow but it can borrow more without incident.
And that, in a nutshell, might explain why shareholders are abandoning ship faster than Disney abandoned that starcruiser hotel project. That’s because chances are Disney shareholders remember the Galactic Starcruiser, a massive hotel project that lost the company $250 million in accelerated depreciation. And it gets worse; though that’s the write-down Disney is taking, the actual sunk costs are likely higher since the costs of operating the thing exceeded the revenue it was drawing.
Is Disney a Buy, Sell, or Hold?
However, analysts consider Disney stock a Moderate Buy, supported by 15 Buy ratings, five Holds, and two Sells. Further, Disney stock offers its investors 33.93% upside potential thanks to its average price target of $109.78.
