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Disney stock erases decade of gains as dividend holders lose money

Disney stock erases decade of gains as dividend holders lose money

As of August 25, Disney (NYSE: DIS) shares have found themselves in an unexpected time warp, reverting to prices reminiscent of nearly a decade ago in 2014, closing at $83.14. This stagnation has left investors puzzled and prompted discussions about the company’s trajectory.

A stock trader using the handle Gurgavin took to Twitter (X) to highlight the disconcerting trend, noting that a 2014 investment in Disney would have yielded no profits, contrary to the stock market’s overall surge of 300%.

Disney stock at 2014 levels. Source: Gurgavin

He underscored the disheartening fact that even with dividends accounted for, shareholders have not experienced any financial gain.

Disney 10Y US Equity. Source: Gurgavin
Disney 10Y US Equity v QQQ EQUITY. Source: Gurgavin

Disneys profits drop

Adding to Disney’s woes, its profits have endured a significant hit, plummeting by 40% in 2022 compared to 2014. This drop has triggered concerns and raised questions about the company’s ability to adapt and compete in a rapidly evolving entertainment landscape.

Disney’s third-quarter earnings report from August 9 only exacerbated the situation. The report revealed shrinking streaming revenues, with Disney+ and Hulu losing 7.4% of subscribers from the previous quarter. The company’s attempts to pivot and capture the digital market seem to be falling short.

Routes for DIS to regain momentum

In light of these challenges, Barton Crockett, Senior Analyst at Rosenblatt Securities, suggested a potential avenue for Disney to regain its footing. Crockett proposed that Disney should either find a solid foundation to support its stock value or consider a radical move towards restructuring.

Crockett’s alternative involves breaking up the company into distinct entities. He envisions a theme park-centered equity, TV networks spun off to private equity firms specializing in assets with cash flow challenges, and a content library that could be leveraged by various tech platforms. This proposition aims to unlock hidden value within the company and reinvigorate its financial standing.

Despite the current absence of official restructuring plans from The Walt Disney Company, Crockett’s idea remains intriguing. As Disney grapples with its declining stock prices and struggles to adapt to changing consumer preferences, a strategic overhaul might be the solution needed to navigate the uncertainties of the future.

At the time of publication, DIS stock is trading at $84.06 up 0.83% on August 28.

While the “House of Mouse” has captivated audiences for generations, it now faces a pivotal crossroads. Investors, industry experts, and enthusiasts alike await Disney’s next move, eager to see if the entertainment giant can reclaim its once-commanding position in the market.

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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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