Analysts See Hong Kong Disney Reclosure As Temporary Setback
On Monday we here at MickeyBlog shared the news that the Walt Disney Company announced that it will be closing Hong Kong Disneyland once again due to the increase in coronavirus cases in China. As a recent piece in The Hollywood Reporter tells us, Hong Kong Disneyland was the second Disney theme park in the world to reopen on June 18th.
As of going to print, Disney said that the Hong Kong park would temporarily close on Wednesday but has yet to release details regarding a potential opening date.
Disney is facing mounting criticism as of late for reopening the parks especially stateside where the virus continues to be on the rise both in California and Florida. However, Disney World did push forward with plans to open the theme parks with Magic Kingdom and Animal Kingdom welcoming back guests on Saturday and Hollywood Studios and EPCOT slated to reopen tomorrow (July 15th.)
So what does all this mean for investors? According to Wall Street Analyst Neil Begley, it doesn’t come as a big surprise for investors that the road to reopening in a COVID-19 world would be a rocky one.
Begley continues, “We anticipated that flare-ups could cause temporary setbacks such as temporary closures and then re-openings again.” He told the Hollywood Reporter, “I don’t expect any long term implications or prolonged closures. But re-closures and potential multiple re-closures could continue until the virus is mostly buttoned-down.”
This is just one of the setbacks Disney has experienced in recent weeks, back in June, Disneyland’s plans to reopen in California were thwarted due to the surge of coronavirus cases in the state. It may be a while before both Disneyland Resort theme parks can reopen with Governor Gavin Newsom announced an order requiring operations to close effective immediately. This covers restaurants, movie theaters, family entertainment centers, wineries, zoos, museums and more. Governor Newsman said in a press conference, “We’re seeing an increase in the spread of the virus, so that’s why it’s incumbent upon all of us to recognize soberly that COVID-19 is not going away any time soon until there is a vaccine or an effective therapy.”
Another research analyst from CFRA, Tuna Amobi said that the closure of Hong Kong DIsneyland, “underscores the fluidity of the COVID-19 outbreak and its projected financial impact across Disney’s worldwide theme park businesses, also raising the specter of similar concerns following the earlier reopening at Shanghai Disneyland.” It should be noted that as of going to print, the theme park in Shanghai remains open.
Begley added that Disney has a bigger concern than temporary closures, this is the overheads of keeping the theme parks running without being able to increase capacity.
As Disney World pushes forward with plans to reopen, the Florida Health Department reported a record-breaking 15,299 new confirmed cases of COVID-19 on Sunday alone. This marked the highest daily total recorded in ANY US state up until this point. However, Begley said, “In Florida, Disney may in fact be leading by example with social distancing and mask-wearing if in fact the science behind those protocols proves effective and spread is not traced to park attendance,” he said. “The state of Florida is very dependent upon Disney World, so I would not necessarily expect a push for broad closure unless the spread and hospitalizations in Orlando approaches critical levels.”
While the surge in cases raises concerns regarding the theme parks reopening as Bagley says, “Longer term, we believe Disney’s portfolio diversification and relative financial strength continue to provide distinct competitive advantages as the media and entertainment industry navigates the highly disruptive impact of the pandemic.”
This is certainly a story that we’ll continue to follow closely. Keep checking in with MickeyBlog for further Disney news and updates. \
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