Jim Cramer says he would be a buyer of Disney if the stock goes to this key level
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Jim Cramer would be a buyer of Walt Disney if the stock were to trend lower. “I want to buy more,” he said during the Investing Club’s October Monthly Meeting on Wednesday. If shares were to fall below $90 each, he added, we would consider adding to our position. He said that buying on weakness makes sense because the slowdown in Disney’s theme parks business, the profit engine at the company, will eventually abate. Shares rose nearly 2% on Wednesday to around $96 each. Disney’s experiences unit, which includes theme parks, accounts for roughly 40% of the company’s overall segment operating income, according to Piper Sandler. That is a far cry from the 68% that experiences contributed on a combined basis in fiscal 2022 and 2023 when the theme parks business was booming post-Covid. In Disney’s most recent quarter , reported Aug. 7, domestic parks in Florida and California showed softness as inflation-wary consumers became more cautious. Alongside those fiscal Q3 numbers, the company projected flat attendance over the next few quarters. Executives first mentioned a “normalization” of parks demand back in May as part of the company’s fiscal second-quarter earnings report. Jim said Disney must shift focus away from “trying to figure out what’s next” in movies and television and concentrate on theme parks, which are the hub behind the company’s growth. If Disney “can produce some sort of long-term growth path, which includes something besides movies and ESPN,” the company’s stock should eventually go higher, he argued. “Build more theme parks” since they make money, he added. To be sure, the company has committed to putting big money toward parks — announcing a little over a year ago a $60-billion, decade-long investment in its experiences businesses, which also include cruises. The challenge, at least in the short term, is dealing with the demand slowdown at Disney theme parks. Total parks attendance for September was down 6% year over year and down 12% month over month, according to KeyBanc Capital Markets’ geolocation data published Tuesday. The KeyBanc analysts expect fiscal fourth-quarter revenue from Disney’s experiences unit to be flat year over year. That would be a deceleration from the prior quarter’s 2% annual growth. KeyBanc analysts said they “struggle to see why either of those metrics will get better,” especially after the disruptions from the back-to-back Helene and Milton hurricanes. DIS YTD mountain DIS stock performance year-to-date. Disappointing parks performance has weighed on Disney’s stock — even overshadowing the company’s first-ever quarterly profit in its combined streaming business, which encompasses Disney+, Hulu and ESPN+. Shares have underperformed the broader market year to date — advancing only 6% versus the S & P 500 ‘s more than 22% gain in 2024. Jim’s message, however, was to “stay long” the stock, saying the Federal Reserve is cutting interest rates, which could be a bullish sign for consumer-facing companies like Disney. “I am counseling patience because while there is no truly visible magic bullet here, things are gradually getting better,” he said during Wednesday’s Club meeting livestream. The Club has a $130 per share price target and our buy-equivalent 1 rating on Disney stock. (Jim Cramer’s Charitable Trust is long DIS. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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