Disney takes a blow on the stock market after announcing 28,000 layoffs in the US
Walt Disney Co. has announced that it will lay off about 28,000 workers in its cruise ship and theme park section because it cannot overcome the impact of restrictions caused by the coronavirus pandemic.
The company had to close all its theme parks as a result of the pandemic, although over the summer it was able to reopen them with capacity restrictions, with the sole exception of California, whose authorities maintain the reopening ban.
"As heartbreaking as this decision may be to make, this is the only feasible option we have in light of the prolonged impact of COVID-19 on our business, including limited capacity due to physical distance requirements and continuing uncertainty regarding the duration of the pandemic,"Josh D Amaro, president of Disney Parks, Experiences and Products, explained in a letter to employees.
Disney's parks and resorts division employs more than 100,000 workers in the United States, so the news has been greeted with much concern among investors. Disney shares fell 2.7% in the pre-opening US market to $122.
Source: Admiral Markets MetaTrader 5. Daily Disney CFD chart. Data range: from January 14, 2020, to September 30, 2020. Prepared on September 30, 2020, at 11 am. Keep in mind that past returns do not guarantee future returns.
As we see in the graph, Disney shares plummeted in the worst moments of the pandemic, but then managed to rally little by little and even in early August they achieved a strong boost after announcing record results on its Disney Plus streaming platform, where they released their latest film, Mulan.
Since then, the company has been reeling in the stock market due to uncertainty ahead of new outbreaks of the pandemic. To understand Disney's performance this year releative to its growth over past five years, consider the folloiwng:
- So far, in 2020, it has already lost just over 13% of its value
- Disney only closed 2016 in the negative (-0.82%)
- Last year ended with a cumulative rise of 31%.
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