The Walt Disney Company’s (NYSE:DIS) theme park in Florida may finally escape the revocation of its special tax status under its newly reinstated CEO, Robert Iger. Iger is known to have a more neutral stance in state politics, which is preferred by many lawmakers. Disney’s theme park in Florida enjoyed several exemptions and tax benefits under the Reedy Creek Improvement District.
A slew of remarks by ex-CEO Bob Chapek earlier this year irked Florida Governor Ron DeSantis, who then decided to rip off Disney’s “special district status,” which would be effective June 1, 2023. However, there is hope under CEO Iger that the decision could be revoked.
No deal is underway yet, but there are chances that a new district would be formed, albeit with lesser benefits. Disney’s special status also helps its two adjoining counties run their local services, as Disney pays taxes to them directly. So, it is in the best interest of both the state and Disney to have the latter’s special status reinstated.
A spokesperson for Governor DeSantis said, “The governor was right to champion removing the extraordinary benefit given to one company… We will have an even playing field for businesses in Florida, and the state certainly owes no special favors to one company.” He also added, “Disney’s debts will not fall on the taxpayers of Florida. A plan is in the works and will be released soon.”
Is Disney Good to Invest In?
Wall Street analysts are highly optimistic about Disney’s stock trajectory. On TipRanks, DIS stock commands a Strong Buy consensus rating based on 17 Buys and four Holds. The average Walt Disney price forecast of $121.35 implies 22.1% upside potential to current levels. Meanwhile, the stock has lost 36.6% so far this year.
From the valuation perspective too, Disney stock is trading at a forward Price/Sales (P/S fwd) multiple of 1.99x, which is lower than its historical five-year average of 3.25x, reflecting that the company has substantial room for growth.