Walt Disney Co announced on Tuesday that nearly 28,000 employees at its US theme parks would be laid off, most notably in California where Disneyland is still closed, as the COVID-19 pandemic has delivered a severe hit to overall visitor flow.
Walt Disney shares closed lower for the sixth time in the past ten trading sessions in New York on Tuesday. The stock went down 0.47% ($0.59) to $125.40, after touching an intraday low at $123.68, or a price level not seen since September 25th ($120.98).
Shares of Walt Disney Company have retreated 13.30% so far in 2020 compared with a 3.24% gain for the benchmark index, S&P 500 (SPX).
In 2019, Walt Disney’s stock went up 31.90%, thus, it outperformed the S&P 500, which registered a 28.88% gain.
Nearly two thirds of the layoffs will affect part-time workers, Disney said.
“We have made the very difficult decision to begin the process of reducing our workforce at our Parks, Experiences and Products segment at all levels,” Josh D’Amaro, chairman of the parks unit, was quoted as saying by Reuters.
D’Amaro highlighted the limited capacity at parks and the uncertainty about the pandemic’s duration as reasons behind the company’s “heartbreaking” decision.
Prior to the coronavirus crisis, 77,000 people had been in full-time and part-time employment at Walt Disney World in Florida and 32,000 people at Disneyland in California. However, the company did not specify the number of US employees it has in its parks unit, which encompasses consumer products, cruise lines among other businesses.
Analyst stock price forecast and recommendation
According to CNN Money, the 23 analysts, offering 12-month forecasts regarding Walt Disney’s stock price, have a median target of $135.00, with a high estimate of $163.00 and a low estimate of $103.00. The median estimate represents a 7.66% upside compared to the closing price of $125.40 on September 29th.
The same media also reported that at least 15 out of 26 surveyed investment analysts had rated Walt Disney’s stock as “Buy”, while 10 – as “Hold”.