Walt Disney (DIS) stock was having a terrific 2024 through early May. Shares were up nearly 30% for the year-to-date, making DIS the best performing component of the Dow Jones Industrial Average.
But then the bottom kind of fell out when DIS reported quarterly earnings. Shares sold off sharply after the media and entertainment giant's revenue came up short of Wall Street's expectations for its fiscal second quarter.
Make no mistake: Wall Street continues to be bullish on the name. The past three years, however, have been rough on this bluest of blue chip stocks.
Everyone remembers how the pandemic clobbered Disney, whose theme parks and film businesses were epically exposed to COVID-19. Dividend investors certainly recall that the company suspended its payout in the early months of the outbreak in order to conserve cash.
Happily, Disney reinstated the dividend at the end of 2023. It was welcome news for income investors and most certainly helped bolster the share price.
Perhaps fewer remember how DIS stock more than doubled between March 2020 and March 2021, when shares hit an all-time high as a pandemic recovery play. At the top, Disney boasted a market capitalization of more than $366 billion.
What Disney shareholders would probably like to forget is that DIS stock is still worth only about half of what it was at its peak.
Indeed, DIS stock has lost about 48% of its value since hitting a closing high back in March 2021, shedding $175 billion in market capitalization in the process. To put such a sum in context, $175 billion is more than the entire market values of 13 of 30 Dow stocks, including Caterpillar (CAT), American Express (AXP) and Verizon (VZ).
DIS was one of the 30 best stocks in the world over the three decades ended 2020, so what happened?
The rise of streaming, cord cutting and other industry changes over the past couple of years have Disney facing existential questions. If CEO Bob Iger's first tenure with the company was all about acquiring assets and making Disney bigger, his sequel run as top exec is all about making Disney smaller. Figuring out what to do with the ABC network and ESPN are just a couple of Iger's strategic concerns.
The bottom line on Disney stock
As noted above, Disney was one of the best stocks in the world over the three decades between 1990 and 2020. Mostly, though, it's been a dud.
While it's true that you can manipulate historical returns by fussing with their beginning and end points, Disney's record vs the broader market over pretty much any standardized period you care to measure is poor.
For its entire history as a publicly traded company, Disney stock generated a total return (price change plus dividends) of 8.9% annualized. That trails the S&P 500's annualized total return of 10.4% over the same span. DIS stock also lags the performance of the broader market over the past one-, three-, five-, 10-, 15- and 20-year periods – often by very wide margins.
Have a look at the above chart and you'll see that if you put $1,000 into Disney stock 20 years ago, it would today be worth $6,226. The same amount invested in the S&P 500 would theoretically be worth $6,847 today.
Call that a tie, if you like, but Disney shareholders expected more than market-matching returns.
If there's a sliver of a silver lining for buy-and-hold Disney investors, well ... at least Wall Street likes its chances of beating the market over the next 12 to 18 months. Of the 31 analysts issuing opinions on DIS stock surveyed by S&P Global Market Intelligence, 17 rate it at Strong Buy, seven say Buy, five have it a Hold and two call it a Strong Sell. That works out to a consensus recommendation of Buy, with high conviction.
