Question

What are some different factors causing market price fluctuations in Disney stock and how do you expect the company to do in the future post Corona Virus?

Answer 1

The main factors which cause market price fluctuations in the Disney stock are :

• Growth in the revenue : Disney had many kinds of sources to increase its revenue. Its revenue was over $10billion in year of 2019. The various revenue sources are media and advertising networks, fox benefits, theme parks and resorts benefits, studio entertainment etc. This is an important factor which determines its market price fluctuations.
• Change in the net income : A decline in the net income is also a major factor. The net income had decreased in 2019 when compared to 2018. This change in net income is caused by reduction in net income margin and revenue growth.
• Change in earnings per share (EPS) : Disney had faced a severe decrease in its EPS in 2019. It is due to net income reduction and higher number of its share count.
• P/E multiple expansion : disney had a great rise in its P/E multiple. It is mainly due to the addition in its overall revenue as a result of disney+.

Due to the corona virus pandemic, its entertainment parks and resorts were closed. It also stopped its blockbuster productions since many of its live sports have been suspended. Inorder to overcome this situation, disney had a taken a large amount of money as debt. If the situation lasts, disney won't gets its revenues from its sources and may break completely. Disney had a great amount of workforce and most of them working in its entertainment parks, studios and resorts are now job less but the company is taking care of their health care benefits during this situation.

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