What they've taken away

[Tyler's Dad]

I visited Universal several times during the pass year. No they did not say that they did not care about COVID at Universal. Team Members were constantly and consistantly making sure guests were staying socially distant and were wearing masks. I saw them several times getting guests back to an appropriate distance. Disney was still accepting guest who had AP's and renewing APs. for those who already had them and they were still charging us. They just weren't selling new ones. And they would like Floridians to come just as much as Universal. Money is money. T And I saw more guests not wearing masks and not socially distancing at Disney.

And Universal made the process of their parks closed easier by simply extending the AP's. I spent hours on the phone for weeks at a time trying to get Disney to do the same thing. I don't know if everyone had this experience. All I can say is this was mine

You are correct, Universal didn't come out and say it, but what they did decide was to not limit capacity as much, go back to full operations faster, and market what they were doing different than Disney. They needed to be at or near capacity to make money. They needed locals to get there. To get as many locals as they needed, they needed annual passholders. Disney did not need either of those, since reduced capacity limits were still being met by people that were staying on property.

 

[Tyler's Dad]

Basically you're saying Disney has a legal right to recoup losses for shareholders benefit, the part you miss is, those funds are gone.

By your logic, when you spend money, you shouldn't work to make more, since that money is gone.

Disney has an obligation to make their shareholders money. If they don't they don't exist. Losses are part of what kills share value, but so does not meeting profit expectations. Just because a company makes a profit, doesn't mean they met expected profits, which still hurts the share value.

 

[kbelle8995]

You are correct, Universal didn't come out and say it, but what they did decide was to not limit capacity as much, go back to full operations faster, and market what they were doing different than Disney. They needed to be at or near capacity to make money. They needed locals to get there. To get as many locals as they needed, they needed annual passholders. Disney did not need either of those, since reduced capacity limits were still being met by people that were staying on property.

No they did not. Disney parks were packed. Went when it was quite busy when these rules were still in place. Hollywood Studios was packed. Long lines everywhere. An hour wait to just get into the Star wars marketplace. The park reservations at least for that park didn't stop the crowds.

And I some Floridians do have to stay at a hotel to visit Disney. It's a huge state.

And I know Disney doesn't give a hoot about AP holders. 8 plus hours waiting on the phone with them convinced me of that. that. I just don't agree that they don't need AP. Sorry I just respectably disagree

 

[Wiltony]

By your logic, when you spend money, you shouldn't work to make more, since that money is gone.

Disney has an obligation to make their shareholders money. If they don't they don't exist. Losses are part of what kills share value, but so does not meeting profit expectations. Just because a company makes a profit, doesn't mean they met expected profits, which still hurts the share value.

Legitimate question out of genuine ignorance: Where does that obligation come from? What if a company doesn't work to increase their share price? How is a company harmed if their stock price goes down? Other than maybe stockholders voting out members of the board, what consequences are there?

 

[cgattis]

What they are doing now is to try to use this time to fix some issues they saw with crowding, the tilting of their experience away from new visitors and toward mega planners, and what they saw as some missed revenue streams.

Not to be ugly, but I call BS on those first two (on them, not you). I don’t think Disney cares at all about crowding. And I don’t think they care how much planning anyone has to do. I think any posturing they do WRT those are directly a result of the third one. Genie isn’t there to help the non-planner, it’s there to facilitate all these new micro transactions (“mini money grabs”) IN THE MOMENT! Many folks who plan ahead of time (packages, dining plan, etc.) do that so they can pre-pay and end their vacation without a big bill. Disney wants to let you keep paying for stuff up front but THEN take advantage of that “vacation mode” to the max…beyond “ah what the heck, get that second Dole whip” to “well heck, let’s just drop $100+ and skip that line!” Repeat for every headliner in every park. Plus the $15/ticket/day to use FP. I’ll be shocked if something doesn’t also emerge soon for upgraded fireworks viewing, etc.

Again, I know they SAY that, I just don’t believe it.I hope I’m wrong.

 

[Tyler's Dad]

No they did not. Disney parks were packed. Went when it was quite busy when these rules were still in place. Hollywood Studios was packed. Long lines everywhere. An hour wait to just get into the Star wars marketplace. The park reservations at least for that park didn't stop the crowds.

And I some Floridians do have to stay at a hotel to visit Disney. It's a huge state.

And I know Disney doesn't give a hoot about AP holders. 8 plus hours waiting on the phone with them convinced me of that. that. I just don't agree that they don't need AP. Sorry I just respectably disagree

I'm not saying they don't need them long term. They do and the hold times and communication is an issue that I have with the way they are treating people. What I am saying and your above backs up, is that they didn't need annual passholders during the capacity limits. Hotel guests and single day ticket purchasers was more than enough to fill the parks. Universal and Six Flags needed those guests in order to fill them.

 

[Rickat96]

By your logic, when you spend money, you shouldn't work to make more, since that money is gone.

Disney has an obligation to make their shareholders money. If they don't they don't exist. Losses are part of what kills share value, but so does not meeting profit expectations. Just because a company makes a profit, doesn't mean they met expected profits, which still hurts the share value.

No-the closure of Disney parks for the Pandemic is why they did not make as much of a profit they normally do- That opportunity to make that money is gone.

 

[Tyler's Dad]

Legitimate question out of genuine ignorance: Where does that obligation come from? What if a company doesn't work to increase their share price? How is a company harmed if their stock price goes down? Other than maybe stockholders voting out members of the board, what consequences are there?

The obligation comes to the people buying the stocks. If a company does not value their shareholders, the shareholder sell their stocks. If there is a large shareholder selloff, stock prices plummet and that can take years to recover from, if you ever do.

Stock value is a hazy mess, but it does effect cashflow for companies, the ability to obtain credit for projects, and overall stability of the company. We all like the new rides and want longer hours and show to return. That does not happen without shareholder happiness.

 

[TiggerBouncy]

Basically you're saying Disney has a legal right to recoup losses for shareholders benefit, the part you miss is, those funds are gone.

I am not missing anything. I am saying that "entitlement" has nothing to do with it. No company should yawn at the pandemic and say "oh well. We lost money. Get over it". Any company that expects to have investors should be saying "well, yeah. We lost money. Here is our vision of how we expect to make that money back as well as make more".

 

[Tyler's Dad]

Not to be ugly, but I call BS on those first two (on them, not you). I don’t think Disney cares at all about crowding. And I don’t think they care how much planning anyone has to do. I think any posturing they do WRT those are directly a result of the third one. Genie isn’t there to help the non-planner, it’s there to facilitate all these new micro transactions (“mini money grabs”) IN THE MOMENT! Many folks who plan ahead of time (packages, dining plan, etc.) do that so they can pre-pay and end their vacation without a big bill. Disney wants to let you keep paying for stuff up front but THEN take advantage of that “vacation mode” to the max…beyond “ah what the heck, get that second Dole whip” to “well heck, let’s just drop $100+ and skip that line!” Repeat for every headliner in every park. Plus the $15/ticket/day to use FP. I’ll be shocked if something doesn’t also emerge soon for upgraded fireworks viewing, etc.

Again, I know they SAY that, I just don’t believe it.I hope I’m wrong.

I absolutely agree with you that they want to maximize profits and companies have realized micro transactions do just that, so I am with you there. I don't love it and as someone who traveled almost exclusively during free dining in the past, I loved having things paid for and planned in the past. I actually believe that in the long run, you will see things like Genie + deals for hotel stays and still having the ability to use the dining plan. I just don't think they needed all of that right now and there is no reason to do it, if you don't need to.

As for fireworks viewing, they had that with dessert parties and will get those back soon, I'm sure.

 

[TiggerBouncy]

Legitimate question out of genuine ignorance: Where does that obligation come from? What if a company doesn't work to increase their share price? How is a company harmed if their stock price goes down? Other than maybe stockholders voting out members of the board, what consequences are there?

Taking the question at face value... If a company does not increase the value to the stock holders, it goes out of business.

People buy stock for one reason and one reason only. It's an investment. There are 2 ways you earn money off of stock. Either Dividends or an increase in the perceived value of the company. Dividends are very simply profit sharing. If the company does not increase profits, it does not give dividends. So people do not purchase the stock.

If the stock value does not go up (which is really just a reflection of the perceived value of the company) then people do not purchase the stock.

The value of the stock basically determines things like the "Market Cap". A companies market cap is what affects it's credit rating. The credit rating in turn affects the amount of money it has access to and the interest rates it pays on that money - which in turn affects how much money the company has - which is used to bujild new rides, add new experiences, or invest in more projects in order to make more money which makes the stock go higher which allows them to do more - it's a cycle.

In other words, if you do not increase the value, people sell. Your market cap goes down. You have less access to loans and current loans go up. That increases your operating costs and you lose more money. If it drops enough, you get purchased by another company and either they make money or break you apart into pieces and sell you off.

This is a very simplistic description...

 

[HashberryOTG]

No they did not say that they did not care about COVID at Universal. Team Members were constantly and consistantly making sure guests were staying socially distant and were wearing masks. I saw them several times getting guests back to an appropriate distance.

It was clear to me during these times that the unions for Disney and Universal were not the same. Disney was much more strict with their employees, which was in part due to the union demands. Universal wasn't as strict, and also was able to loosen them faster. Come to think about it, I never hear about unions at Universal at all, actually. Do they even have one?

I agree with those saying it would be great if some of these things come back. We know the dining plan will, but we don't know what it will look like. I suspect things like package delivery to return. More and more characters are returning, they're getting easier to see and interacting more, buffets are coming back and they have fireworks again. All things people on this board were dooming and glooming would never return. Yeah, I want them instantly too tho, so I get it! I miss most of these things, and dessert parties too!

As an accountant, there's a lot those bits of financials are saying that most people won't notice. And without the full financial, include the notes, it isn't a full picture and doesn't tell the whole story. Sure, those financials are public, but I'm mostly retired and avoiding them (ok, and just don't want to, lol). Regardless, it's fair to react to what you understand. A company knows that the financials are for the board and the auditors, but anyone can read them. If an impression is formed because of that, that's something they have to deal with. We are free to form our impressions based on what we see, and what we experience in the parks. And they know it. It's perfectly fair to react to what you're experiencing. To some, that's wait it out and continue to go (I'm in that bucket). To others, it's to move on to other things. No one's mind is going to be changed here, but the opinions are important.

 

[Wiltony]

Thank you both for your responses. A few follow-up questions/comments, if you will indulge me. And please note, I'm not trying to be glib or contrarian, I'm just exploring why/how this relationship works and why companies really do try so hard to increase their stock price and the consequences of not doing so.

Other than access to credit, the other impacts you indicate don't seem to affect the company directly, just the shareholders; at least to my novice understanding, hence my question.

The obligation comes to the people buying the stocks. If a company does not value their shareholders, the shareholder sell their stocks. If there is a large shareholder selloff, stock prices plummet and that can take years to recover from, if you ever do.

My question is, why is this bad? Who cares if the stock price plummets 80% and never recovers? The shares have been sold, the company has received the funds from the initial sale, so what does it matter, then, to the company, if the shareholders can no longer re-sell those shares at a personal profit? I guess such a scenario would affect the company's ability to issue any *new* shares for sure, but I'm curious what kind of immediate impacts to the company would be if that happens.

Stock value is a hazy mess, but it does effect cashflow for companies

Whaaaa -- this one I don't understand. Once they sell their stock to the public, they don't see any subsequent income or expense as the price of that stock fluctuates. How can it affect their cashflow? I guess it would if the company itself owned some of those shares (which I know many do) and then tried to sell them. Or if they tried to issue new shares, but still....

the ability to obtain credit for projects, and overall stability of the company. We all like the new rides and want longer hours and show to return. That does not happen without shareholder happiness.

I can see a correlation here, since banks and credit agencies won't want to loan money (or the public won't buy bonds) for a company that is not profitable, and stock price will also trend with profitability, but I don't see the causation of how a stock price reduction will impact a company's credit directly.

Taking the question at face value... If a company does not increase the value to the stock holders, it goes out of business.

This one I disagree with. GE's stock price, for instance, has consistently gone down for years and years and they are still in business. Again, I think what you're seeing is correlation, not causation. The stock price going down is not causing the business to fail, but rather, the other way around. Lower profits or performance for a business results in lower stock price.

People buy stock for one reason and one reason only. It's an investment. There are 2 ways you earn money off of stock. Either Dividends or an increase in the perceived value of the company. Dividends are very simply profit sharing. If the company does not increase profits, it does not give dividends. So people do not purchase the stock.

If the stock value does not go up (which is really just a reflection of the perceived value of the company) then people do not purchase the stock.

I understand what you're saying, but I don't understand how any of that impacts the company directly. I get that dividends are a choice by the company, and that they could share profit with shareholders via dividends, or they could also re-invest those profits into growing the business, but none of that has anything to do with the stock price itself. And again, it doesn't seem, on the face of it, to affect the company directly if people don't buy the stock (subsequent to the initial sale of stock from the company anyway).

The value of the stock basically determines things like the "Market Cap". A companies market cap is what affects it's credit rating. The credit rating in turn affects the amount of money it has access to and the interest rates it pays on that money - which in turn affects how much money the company has - which is used to bujild new rides, add new experiences, or invest in more projects in order to make more money which makes the stock go higher which allows them to do more - it's a cycle.

In other words, if you do not increase the value, people sell. Your market cap goes down. You have less access to loans and current loans go up. That increases your operating costs and you lose more money. If it drops enough, you get purchased by another company and either they make money or break you apart into pieces and sell you off.

In this circumstance, "Market cap" is just being used as a surrogate for stock price (since Market cap is just share price x outstanding shares). With that in mind, we're back to what I mentioned above: That profitability can impact credit ratings, etc. and impact a company's access to loans, bonds, and credit, and will thus correlate with stock price, but I don't see the causation component there.

Thank you both for sharing your expertise and experience!

 

[Tyler's Dad]

Thank you both for your responses. A few follow-up questions/comments, if you will indulge me. And please note, I'm not trying to be glib or contrarian, I'm just exploring why/how this relationship works and why companies really do try so hard to increase their stock price and the consequences of not doing so.

Other than access to credit, the other impacts you indicate don't seem to affect the company directly, just the shareholders; at least to my novice understanding, hence my question.



My question is, why is this bad? Who cares if the stock price plummets 80% and never recovers? The shares have been sold, the company has received the funds from the initial sale, so what does it matter, then, to the company, if the shareholders can no longer re-sell those shares at a personal profit? I guess such a scenario would affect the company's ability to issue any *new* shares for sure, but I'm curious what kind of immediate impacts to the company would be if that happens.


Whaaaa -- this one I don't understand. Once they sell their stock to the public, they don't see any subsequent income or expense as the price of that stock fluctuates. How can it affect their cashflow? I guess it would if the company itself owned some of those shares (which I know many do) and then tried to sell them. Or if they tried to issue new shares, but still....



I can see a correlation here, since banks and credit agencies won't want to loan money (or the public won't buy bonds) for a company that is not profitable, and stock price will also trend with profitability, but I don't see the causation of how a stock price reduction will impact a company's credit directly.


This one I disagree with. GE's stock price, for instance, has consistently gone down for years and years and they are still in business. Again, I think what you're seeing is correlation, not causation. The stock price going down is not causing the business to fail, but rather, the other way around. Lower profits or performance for a business results in lower stock price.


I understand what you're saying, but I don't understand how any of that impacts the company directly. I get that dividends are a choice by the company, and that they could share profit with shareholders via dividends, or they could also re-invest those profits into growing the business, but none of that has anything to do with the stock price itself. And again, it doesn't seem, on the face of it, to affect the company directly if people don't buy the stock (subsequent to the initial sale of stock from the company anyway).


In this circumstance, "Market cap" is just being used as a surrogate for stock price (since Market cap is just share price x outstanding shares). With that in mind, we're back to what I mentioned above: That profitability can impact credit ratings, etc. and impact a company's access to loans, bonds, and credit, and will thus correlate with stock price, but I don't see the causation component there.

Thank you both for sharing your expertise and experience!

While yes, a company gets the money from the stocks at IPO, they are constantly releasing more stocks and the value of those matters. If Disney wants to invest billions to create Disney+, that cash is just not sitting around. They have to generate it somehow. Selling more share creates that capital. If share prices are down, then they have to borrow that money, which costs more long term and their rates are higher, because of the lack of trust in an unhealthy company.

 

[HashberryOTG]

My question is, why is this bad? Who cares if the stock price plummets 80% and never recovers? The shares have been sold, the company has received the funds from the initial sale, so what does it matter, then, to the company, if the shareholders can no longer re-sell those shares at a personal profit? I guess such a scenario would affect the company's ability to issue any *new* shares for sure, but I'm curious what kind of immediate impacts to the company would be if that happens.

Their stock price and stability effects not only those with a few shares, but their large investment companies as well that may hold a significant, voting % of the shares. Lower stock prices = lower net worth. Lower net worth = less spending power, and future borrowing is at risk due to fewer borrowing opportunity with smaller lines of credit. Faith in the company declines, which means replacing any share holders gets harder and harder. Also, if stock drops too cheap, they come at risk for a hostile takeover. Too many shares outstanding means a group could get a significant % of the stock, essentially against their will.

 

[Wiltony]

Thank you again, for your responses. Sounds like they (stock price vs profitability) just go hand-in-hand. By trying to increase the stock price of a company, they are also trying to increase profitability, credit worthiness, spur growth, etc. It doesn't really matter if one "causes" the other as long as there is a correlation. By doing one, the other happens as well.

Works for me, I guess. Thanks for the exploration of the subject.

 

[TiggerBouncy]

Thank you again, for your responses. Sounds like they (stock price vs profitability) just go hand-in-hand. By trying to increase the stock price of a company, they are also trying to increase profitability, credit worthiness, spur growth, etc. It doesn't really matter if one "causes" the other as long as there is a correlation. By doing one, the other happens as well.

Works for me, I guess. Thanks for the exploration of the subject.

Correct. When you get to be a large company, loans, interest rates, and the like mean everything. Disney right now has debt's totaling 80 Billion dollars. A difference of even 1% interest rate is 800 Million dollars. That's a lot of money. Your stock price and company valuation (and Market Cap) determine how trustworthy you are as a company and how extended you are which in turn affects if your credit rating is AAA or B or D. Just like in personal finance, the ability to secure loans and the payment terms (equally as critical) are determined by how banks look at these things.

In addition, banks are weary of risk. A hostile takeover may not be at a favorable price for the bank / lending agencies or investors. If the company valuation is low enough, there is significant risk of a hostile takeover which again severely limits your access to credit. If you do not have credit, you can not add that fancy new ride and you become stale which means you go out of business.

In my old business, we have similar but different issues. We dealt in inventory. But at the end of the day, the amount of inventory isn't just a number. It's not just some item sitting on a shelf. We have loans that help us purchase that inventory. We pay interest fees that pay for those loans. The difference in profitability for us was literally a 2% cost difference in our rates.

Which means literally that if our credit worthiness was considered enough of a risk that we dropped from a AAA to a A, we would eventually either go out of business or be bought out and likely broken up.

Hope this helps. It's not just you, I think a number of people do not understand how all this works and believe that the only reason a companies stock price matters is literally just to make rich investors more money. Unfortunately the world is a lot more complicated than that. Apple is a rarity in that they have a huge war chest. MOST companies live and die by cash flow and loans and credit are a daily part of cash flow.

 

[recmouse]

This thread is depressing but so true.

Already covered here, but to dive deeper, how about late night EMH for resort guests like Magic Kingdom until 3:00AM. Included in your stay, yes even for us peons staying at Pop Century. Those were the days... sigh.

THIS! We have GREAT memories of those E-ticket nights

 

[Grumpy by Birth]

I am not missing anything. I am saying that "entitlement" has nothing to do with it. No company should yawn at the pandemic and say "oh well. We lost money. Get over it". Any company that expects to have investors should be saying "well, yeah. We lost money. Here is our vision of how we expect to make that money back as well as make more".

I'd agree with you... but I would add that what a lot of "old timers" (even some not-so-old timers) are unhappy about is that Disney's business model used to be to make a lot of money by offering a "premiere" experience that people were willing to spend a lot for (even save up for years to afford in many cases). In recent days, it seems like the strategy has changed to making a lot of money by simply raising prices while reducing the experience to cut costs. Unhappy guests will eventually result in unhappy stockholders.

 

[TiggerBouncy]

I'd agree with you... but I would add that what a lot of "old timers" (even some not-so-old timers) are unhappy about is that Disney's business model used to be to make a lot of money by offering a "premiere" experience that people were willing to spend a lot for (even save up for years to afford in many cases). In recent days, it seems like the strategy has changed to making a lot of money by simply raising prices while reducing the experience to cut costs. Unhappy guests will eventually result in unhappy stockholders.

Do not disagree at all. In which Disney can be saying (or not saying, but showing) that their plan to make money back for their shareholders is to skimp as much as possible. That is certainly ONE business plan. Not the one I would personally choose..... But Disney would not be the first (or last) company to follow such a plan in hopes to drive profit.

But to my earlier point they are still entitled to try it that way if that is their choice. It is then up to the shareholders AND customers both to "inform" Disney that they are not happy with that strategic plan - and force the issue if we must.

To add my 2 cents on top of this... despite what I am arguing, I personally happen to agree with you that I believe Disney has gotten to where they are by offering a premier experience (even if that costs a premium amount of money). I believe that is a terrific business model. I personally thought the Disney bubble was a wonderful concept and am not happy that it was burst. I understand the challenges, but I also believed in the business model.

One of the differences between myself and some others here is that I do not believe in my heart that they have abandoned it. I think a pandemic is a particularly difficult environment to operate in, and I believe they intend to replace these services with others. I am willing to afford them some patience to do so.