Quiver Quantitative - Walt Disney Company (NYSE:DIS) has announced plans to nearly double its capital expenditure in its parks business, committing to an investment of about $60 billion over the next decade. This revelation was made by Disney CEO Bob Iger and the company's parks chief, Josh D'Amaro, at a meeting with Wall Street analysts and investors at Walt Disney World Resort in Florida. The parks have been a consistent source of profit for Disney, assisting in offsetting the losses incurred by the Disney+ streaming platform, which is slated to become profitable next year. The increased investment aligns with Iger's vision of leveraging the parks as a significant asset for the entertainment giant based in California.
Over the last few years, Disney has witnessed a steady expansion in its parks, experiences, and products segment, with a combined annual growth rate of 6% since fiscal 2017. This division has generated a substantial operating income of $32.3 billion in the previous year, as disclosed in a recent regulatory filing. The company emphasized that significant investments, including the introduction of new attractions at various locations, have contributed to increased attendance and profitability. The company is keen to continue this upward trend with further expansions and developments in the coming years.
Despite political tensions in Florida involving Governor Ron DeSantis, Disney remains committed to investing heavily in the region, which is considered a lucrative destination for the business. Around $17 billion has been earmarked for investment in Florida over the next decade, with plans also laid out for extensive enhancements and new attractions at the Disneyland Resort in Anaheim, California. Analyst Paul Verna noted that the potential political risks in Florida wouldn't hinder Disney's plans for bolstering investments in its profitable US venture.
Disney is gearing up for global expansions, targeting over 700 million potential consumers identified as Disney enthusiasts who have yet to visit one of its theme parks. With over 1,000 acres reserved for future development across six existing theme park sites globally, the company aims to expand its reach and influence significantly. Furthermore, Disney intends to augment its cruise line capacity substantially, adding new ships in the coming years. Despite a 3% dip in stock value following the announcement, experts like Thomas Hayes, chairman at Great Hill Capital, perceive this as a short-term reaction and anticipate long-term value generation from this strategic move.
This article was originally published on Quiver Quantitative