Shares of The Walt Disney Company (DIS) have been something of a disappointment to investors over the past few years. The stock has languished in a mostly sideways pattern, and rallies have been few and far between. Disney shares did show signs of life in mid-summer 2025, reaching their highest levels in the past three years, but they have since fallen back down to Earth.
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Overall, Disney is up only about 5% in 2025 on a year-to-date basis, in a year in which the S&P 500 is up closer to 17% as of Nov. 12. For investors, the question remains: Why is Disney trying to rally but still falling short of the S&P 500?
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Why Is Disney Lagging in 2025?
In one sense, Disney stock seems to be a no-brainer. Beyond its beloved theme parks and movie heritage, the company also owns legendary media properties like ESPN and Marvel Studios and operates a flotilla of family-friendly cruise ships. And if you’re looking for name-brand recognition, Disney is certainly in elite company.
But being well known isn’t enough to push the needle when it comes to stock appreciation. Investors need solid earnings growth and a clear plan for continued and growing profitability to pay more for a stock. Here are just a few of the headwinds that are holding the company back in 2025:
- The market is in love with artificial intelligence (AI) and technology: Most of the gains in the S&P 500 this year have been powered by tech and AI-related stocks. In fact, the top seven winners in the S&P 500 for the year so far are Western Digital, Robinhood, Seagate Technology, Micron Technology, Newmont, Palantir Technologies and Lam Research, with Advanced Micro Devices and Intel also in the top 15. This clearly shows where investor money is flowing in 2025, and it isn’t to stocks like Disney.
- Its traditional TV business is hurting: As the world continues to move to streaming, Disney’s traditional TV segment, with broadcast stations like ABC and FX, is struggling. The company’s third quarter earnings report for its fiscal 2025 showed a 28% drop in revenue for its linear networks, thanks to the double-whammy of lower viewership and falling advertising revenue, per CNBC.
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What’s the Good News?
While Disney certainly has some obstacles in its path, much of the recent news has actually been positive. In fact, in spite of the stock’s lackluster 2025 performance, over the past one-year period, Disney’s performance is on par with the S&P 500’s. This just goes to show that statistics and charts can be a bit misleading, and the results can seem very different depending on what time period you use.
Going forward, these are the points that Disney bulls are hanging their hats on:
- Direct-to-consumer has turned around: When Disney reported that its direct-to-consumer unit was operating in the black in the third quarter, it marked a major turnaround for that division. As the company’s chief financial officer Hugh Johnston told CNBC, “Just as a reminder, it was only a couple of years ago that we were losing a billion dollars a quarter on that business.” Continuing to build on this success will likely inspire more confidence in the company overall.
- Analyst upgrade: On Oct. 17, Citi analyst Jason B. Bazinet raised his price target for Disney to $145, according to Barron’s. Overall, 23 of 34 analysts tracking Disney have a rating of “Buy” on the stock, according to MarketWatch. The average price target is $135.78, with the most bullish analyst seeing shares hit $160 in the coming 12 months.
- Strong economy: Fears of an economic recession or slowdown may have held Disney shares back in 2025, but thus far, earnings are coming in strong. Disney is particularly tied to the health of the economy, as its film, theme park and cruise line divisions rely on a strong consumer. If trends hold up, earnings may remain strong for the company.
The Bottom Line
Disney stock hasn’t been much to look at thus far in 2025, as its returns are far behind those of the S&P 500. But on a one-year basis, Disney shares have kept up. The company’s third quarter earnings release showed enough promise for a Citi analyst to upgrade his price target, but there are still some question marks in Disney’s immediate future.
Consistency of earnings going forward — and the avoidance of a recession — could help propel Disney in the right direction. For now, investors are in a bit of a “wait and see” mode until Disney can show continued success over multiple quarters.
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This article originally appeared on GOBankingRates.com: Why Disney Stock Is Up This Year but Still Can’t Beat the S&P 500 — or Can It?
