Can Disney Stock Outperform After Falling 25% Due To Coronavirus?

March 10th, 2020 by Trefis Team
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DIS: Walt Disney logo
DIS
Walt Disney

On Monday, the U.S. markets saw their biggest sell-off since the 2008 crisis with the S&P 500 falling by 7.6%. There were 2 distinct factors behind the sharp decline: a continued increase in the number of novel Coronavirus cases outside China, and a collapse in crude oil prices with Saudi Arabia boosting production. Disney Stock (NYSE: DIS) has fared worse than the broader index, falling by 9.5% on Monday to bring its total decline since early February to 25% amid concerns that its studio entertainment business and theme parks could face significant risks from the Coronavirus outbreak. However, it’s possible that Disney stock could also bounce back strongly outperforming the broader markets, much like it did post the economic crisis of 2008. In this analysis, we compare the performance of Disney to the S&P 500 over the current crisis and the economic crisis of 2007-08 to take a look at where it could be headed.

View our complete dashboard analysis on 2007-08 vs. 2020 Crisis Comparison: How Did The Walt Disney Company Stock Fare Compared with S&P 500?

Disney Stock versus S&P 500 Over 2020 Coronavirus/Oil Price War Crisis

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  • DIS stock declined by 25% since the WHO declared a global emergency on Jan 31 and was down by about 9.5% on Monday, March 9th.
  • In comparison, the S&P 500 has declined by 17.5% since the WHO declared a global emergency on Jan 31 and declined by about 7.5% on Monday, February 9th.

Disney Stock versus the S&P 500 During 2007-08 Financial Crisis

  • Disney stock declined from levels of around $29 in October 2007 (the pre-crisis peaks of the market) to levels of around $14 in March 2009 (as the markets bottomed out) and rebounded strongly to levels of about $28 in early 2010.
  • Disney stock declined by as much as 50% between the market’s approximate pre-crisis peak and when the markets bottomed out. This was roughly in line with the broader S&P which fell by as much as 51%.
  • However, Disney stock rebounded more strongly, rising by over 90% between March 2009 and January 2010. In comparison, the S&P 500 rose by about 48%.

View our complete dashboard analysis on 2007-08 vs. 2020 Crisis Comparison: How Did The Walt Disney Company Stock Fare Compared with S&P 500? for more details and charts.

Conclusion

While Disney stock has seen a sharp decline due to the Coronavirus/Oil Price War crisis, faring worse than the broader markets, it’s possible that it could bounce back strongly outperforming the broader markets, much like it did post the economic crisis of 2008.

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