Visitors to the so-called "Happiest Place on Earth" often find themselves in a scary scenario once their vacation ends.
What Happened: About 24% of Disney-goers have gone into debt to finance their trip.
According to a LendingTree survey, this figure rises to 39% among members of Gen Z and 45% among parents with children under 18. Parents of young children took on an average of $1,983 in Disney-related debt.
Still, theme parks remain Walt Disney Co's
The Burbank-based company, which struggled to turn a profit with streaming, saw revenues of $8.4 billion at an operating margin of 27% in the second quarter of 2024 - that's just its "experiences" (i.e., theme parks, hospitality, cruises) segment alone.
Experiences made up more than 37% of Disney's revenue and 59% of operating profit - higher than it was a year ago.
Why It Matters: Investors will pay close attention to several metrics ahead of Disney's Aug. 7 third-quarter earnings.
The theme park segment remains a bright spot, considering admission prices have steadily ticked up. According to a study from AllEars, adult ticket prices have increased over 90% in the past decade.
A Disney World debtor told the Tampa Bay Times that the "once in a lifetime trip" was "worth it" even though it sent her thousands of dollars into debt..
Total park attendance increased 6% year-over-year in 2024's first quarter and guests spent 6% more at the parks (per capita). Analysts noted that 2024 Q1 theme park results were very strong.
Disney's Other Woes: Despite theme park success, Disney shares are trading more than 50% lower than its all-time high in 2021. Its share price is also down over 10% in the past two years.
Disney - which owns streaming services Disney+, ESPN+ and Hulu - has struggled in the streaming services with immense competition from the likes of Netflix, Amazon Prime Video, Max and Paramount. Disney+ and Hulu have had slow subscriber growth while Disney's movie studio repeatedly bleeds money (although it did have a hit this year with Inside Out 2.)
Indeed, investors will look for updates on subscriber numbers for Disney+, ESPN+, and Hulu. This will also likely be compared to growth rates from competitors like Netflix
Close attention will be paid to any management commentary that could signify a change in strategy in the streaming segment.
In 2023, Disney's entertainment division represented 45% of company revenue but only 11% of operating income. Disney's direct-to-consumer streaming services made just $47 million in operating profit in 2024's second quarter (better, though, than its $587 million loss a year prior and analyst estimates of a $100 million loss.)
