Jim Cramer, the outspoken host of CNBC’s ‘Mad Money,’ has set his sights on Walt Disney Co. (DIS), revealing his intention to snap up more shares if the stock price takes a tumble below $90. This revelation came during the Investing Club’s October Monthly Meeting, where Cramer highlighted the strategic advantage of buying into the market when it’s down.
Cramer’s interest in Disney stems from his belief that the company, despite facing headwinds, holds significant potential. While Disney’s theme parks, a major profit driver, have experienced a slowdown, the stock managed to climb nearly 3% on Wednesday, closing around $96. Analysts at Piper Sandler point out that Disney’s experiences unit, encompassing theme parks, currently contributes around 40% to the company’s segment operating income, a substantial decrease from previous years.
Disney’s latest quarterly report, released on August 7th, revealed weakness in domestic parks in Florida and California, largely attributed to inflation-conscious consumers. However, the company anticipates stable attendance in the coming quarters. Cramer urges Disney to prioritize its theme parks for growth, rather than solely focusing on movies and television.
Despite recent challenges, Disney is making strategic investments. They’ve committed $60 billion over the next decade to bolster their experiences businesses, including their cruise operations. However, KeyBanc Capital Markets observed a 6% year-over-year decline in total park attendance for September, with a 12% month-over-month drop.
Cramer remains optimistic, suggesting that potential interest rate cuts by the Federal Reserve could be a boon for consumer-focused companies like Disney. He believes this could drive increased spending and boost attendance at Disney’s theme parks.
Disney’s theme park operations have faced additional hurdles recently, including natural disasters. Hurricane Milton posed a threat to Walt Disney World in Orlando, potentially impacting revenue. The park responded by restricting reservations and preparing for potential closures due to the storm.
To enhance the visitor experience and entice more guests, Disney is introducing the Lightning Lane Premier Pass, allowing guests to bypass queues at U.S. theme parks. Available from October 23rd at Disneyland and October 30th at Disney World, the pass offers flexibility but requires separate admission tickets.
As Disney navigates fluctuating attendance figures, it’s clear that the company is focused on attracting more visitors and strengthening its position in the entertainment and experiences market. With Cramer’s keen interest and the potential for a market dip, the future of Disney’s stock remains an intriguing watch.