Disneyworld...A Microcosm Of COVID-19 Impact On The US Economy

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When Disney announced their earnings a couple of months ago, the results just plain sucked. Yes, there was Disney+, but there were no sports which meant ESPN was going to suffer, movie theaters were closed, which meant the highly anticipated Mulan that was scheduled to premiere in March, got postponed, Disneyland and Disney World in the US shut down along with parks in Paris, Shanghai and Hong Kong shut down as well.

During the earnings call, executives provided little clarity about near-term financial effects, but did say that the direct-to-consumer segment would record an operating loss of more than $1 billion in the third quarter. So what did the stock do, it rallies from the $100 and went as high as $130 before pulling back.

Downtown Disney in California reopened last week, but the opening of Disneyland is still pending. So what was the significance of Downtown Disney opening, it allowed shops and restaurants to reopen in the business district filled to meet customer demand that was void the last several months…we are talking 50,000 vistors / day to Disneyland? But some businesses didn’t make it. Businesses that rely heavily on the tourism industry have closed indefinitely. Hotels across the street from Disneyland’s main entrance have fenced off their parking lots, and several businesses are boarded up with their lights off.

Pending state and local government approval, Disneyland Resort parks had planned to reopen on July 17 but the reopening was delayed. But just in, California Gov. Gavin Newsom ordered all dine-in restaurants, bars, movie theaters, museums and other indoor businesses across the state to close Monday as Covid-19 cases continue to climb in California. On Sunday, there were over 8,000 new cases on Sunday and the state’s positivity rate, or the percent of all tests returning positive, increased to 7.4%.

Meanwhile, across the country in Florida… they reported over 15,000 new coronavirus cases Sunday, the highest total for any state since the pandemic started.

It took the entire United States 59 days to top 15,000 combined cases -- from January 21 to March 20. It also took the entire US more than two months from the start of the outbreak to top 15,000 new cases in a single day.

A Boeing 747 plane can carry about 400 passengers. That means the coronavirus death toll from Florida is about the same as if 10 jumbo jets crashed, killing everyone on board.

If Florida were a country, it would rank No. 9 in the number of Covid-19 cases worldwide, according to Johns Hopkins data Monday.

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According to John Hopkins, Florida’s test positivity rate is close to 20% 19.60%, Johns Hopkins said. Florida Rep. Donna Shalala said the virus is “out of control.” About 40 hospitals across Florida have no ICU beds available.

Yet after being closed for nearly four months, Disney World reopened on Saturday. This one was a tough one I’m sure for Disney World as the company gets almost 35% of their revenue from the theme parks. Disneyworld employs close to 75,000 people to service 58 million people that visited in 2019. We are talking over 100,000 hotel rooms that were vacant the last several months. We are talking over $60 million in tourist taxes for Orlando. So a lot was at stake if Disney World stayed closed.

However, the dynamics occurring and surrounding Disneyland, Disney World, Orlando, Orange County, Disney’s stock price is nothing more than a macrocosm of what is occurring all over the country and within the equity markets.

Today, Dallas Fed President Robert Kaplan said, the economy did bottom in April, we started to grow again toward the end of April and certainly into May, but now growth is slowing down in part due to the resurgence of COVID-19. Between California closing up shop again and Kaplan's statement, that was enough to cause a huge reversal the stock market. If Disneyworld decides to shut down again, that will result in Orlando continue to be on life support.

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.

Posted Using LeoFinance



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