Friday, July 10, 2020

Investors Entertain the Idea of Buying Disney Shares

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News shaping
the markets today

     

What’s happening: Walt Disney is set to reopen its Disney World theme parks in Orlando, Florida despite rising covid-19 cases in the state.

What happened: The pandemic has severely hit Walt Disney’s revenues, as the Burbank, California-based company has been forced to close its theme parks, resorts and cruise lines, delay its film releases and run its ESPN sports channel with no broadcast of live games.

Walt Disney has been desperately trying to reinvent itself amid the virus outbreak. The conglomerate is investing heavily in content for its subscription-based video streaming service Disney+. The entertainment giant is now gearing up to open its Magic Kingdom Park and Animal Kingdom Park on Saturday, even as the coronavirus count spikes in Florida.

Why it matters: Florida has already confirmed over 233,000 covid-19 cases with its death toll surpassing 4,000. The state witnessed a sudden surge last week, with the single-day rise exceeding 10,000 on three days. The pandemic-related death rate also climbed to almost 19% last week.

Given the alarming rise in infections, some employees sent a petition requesting the company postpone the reopening of Disney World, which has been closed to guests since March. However, unions representing around 48,000 of its employees in Florida have signed contracts to return to work.

The company said it intends to stick to its reopening plan, albeit with safety protocols like temperature checks, mandating masks, and sanitising the facilities. Disney, which had expected to reach 60 million global subscribers by 2024, already reached this target by the end of June. The streaming service debuted Artemis Fowl in June and Hamilton on July 3, both of which received remarkable responses. Over the Independence Day extended weekend, there were 752,000+ downloads for the Disney+ app. The streaming service also received a phenomenal response in other markets, like India.

How shares have performed: Disney’s shares have lost more than 19% year to date. However, the stock made a recovery of around 12% over the past three months. Many analysts view the stock as undervalued, given that Disney’s fundamentals remain strong.

What to watch: Disney had already reopened its retail operations at the parks in Florida. Investors will be keen to know how the Orlando parks perform and await news of Disney’s Hollywood Studios and Epcot reopening on July 15.

The Markets Today

     

European stocks will be in focus today, ahead of industrial production reports from a couple of the region’s countries.

Context: European markets finished lower on Thursday, as rising coronavirus cases in some parts of the world continued to dampen prospects of a global economic recovery.

Details: European stocks had initially climbed as investors cheered positive economic reports and encouraging news related to the covid-19 vaccine.

Gilead Sciences said on Wednesday that it had started testing an inhalable version of its antiviral coronavirus drug Remdesivir. UK Finance Minister Rishi Sunak also announced various measures on Wednesday to help the country recover from the coronavirus-led crisis.

Sentiment was rattled later in the session by the continued spike in coronavirus infections in the US, where the total case-count climbed past 3 million on Wednesday.

Meanwhile, shares of SAP gained around 5% yesterday, after the German software manufacturer confirmed its full-year profit and revenue outlook. Persimmon’s stock rose over 7% after the UK housebuilder reported a 30% year-over-year increase in net reservations in the final six weeks to June 30.

Shares of Airbus fell around 4% yesterday despite the company reported 50% growth in deliveries from May to June.

The pan-European Stoxx 600 index closed lower by 0.8%, with shares of utilities among the worst performers. Technology stocks bucked the trend, rising 0.8%.

London’s FTSE 100 declined 1.7% on Thursday, while the German DAX 30 index slipped 0.04%.

What to watch: Investors await industrial production data from France and Italy. France’s industrial production, which plunged 20.1% in April, is expected to grow by 15.1% in May. Italy's industrial production is projected to jump 22.8% in May, versus a 19.1% decline in April.

Markets will continue to keep an eye of coronavirus numbers, with the total global cases exceeding 12 million.

Other Markets: US indices trading closed mixed on Thursday, with the Dow Jones index and S&P 500 down 1.39% and 0.56%, respectively. However, the Nasdaq 100 gained 0.53% in the previous session.

Support & Resistances
for Today

     

market snapshot

     

Futures at 0400 (GMT)

What else to watch today

     

Canada’s employment change and unemployment rate as well as the US producer prices and Baker Hughes crude oil rigs.