An employee cleans the grounds behind the closed gates of Disneyland Park. (Photo by DAVID MCNEW/AFP via Getty Images)
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If any company encapsulates the worst of what Covid-19 has done to humanity, it might be Walt Disney (ticker: DIS). There are no parks, no movies, no cruises, and now—say it ain’t so Mickey—there is no dividend.
All is not well in the mouse house. Disney (ticker: DIS), which reported first-quarter numbers Tuesday evening, said its earnings fell 93% year over year. Disney decided to “forgo” its semiannual dividend to save money. It’s a prudent choice—the theme parks aren’t open, after all—but a painful one. Shares of the once unassailable media giant are down 2% in premarket trading and 30% year-to-date.
Still, the news wasn’t all bad. Excluding various items that make comparisons difficult, earnings only fell 63% year over year. And in a sign life will return to normal someday, Disney Shanghai is planning to reopen May 11.
But, normal is going to look very different. Park capacity will be about 50% of what it was with masks, contact tracing and temperature screening for all. That means fewer “cast members”—Disney’s term for employees—and who knows what lower capacity will do to ticket prices.
For now, just call Disney the unhappiest place on earth.
—Al Root
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There’s Still a Lot We Don’t Know About Covid-19
It’s easy to forget as 31 states plan to at least partially reopen by May 11 and projections for the U.S. death toll rise that we still know very little about Covid-19. Driving home that fact are the 15 children in New York City who have been hospitalized with an inflammatory condition that may be related to the virus.
- Similar cases, characterized by high fever and symptoms including rash, abdominal pain, vomiting, or diarrhea have been seen in Philadelphia, Boston, and the U.K.
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A number of coronavirus patients have experienced kidney failure and required dialysis machines, a complication not normally associated with a respiratory illness.
“Scientists and doctors are working in the dark as they struggle to contain the Covid-19 crisis and to help those sickened. That’s important for investors and public officials to keep in mind as they project how long it will take to develop an effective vaccine, and as we think through the risks people are asked to take to keep the economy moving.” – Josh Nathan-Kazis, Barron’s reporter
What’s Next: Adding to the complexity of the situation, the novel coronavirus itself is changing and we still don’t know whether the strain that has ravaged New York City, which likely arrived from Europe, is more lethal than what originated in Wuhan.
—Ben Walsh
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Europe in Recession of ‘Historic Proportion’
The economic shock triggered by the coronavirus pandemic may have hit all European countries equally, but not all will suffer in equal measure, the European Commission said Tuesday in its quarterly economic forecast. Such divergences “pose a threat” to EU integrity and the eurozone area, Economy Commissioner Paolo Gentiloni warned.
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Both the drop in output and the recovery will differ markedly from country to country, the EU executive body said, predicting EU gross domestic product to fall 7.5% this year.
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Output will fall by a little more than 4% in Poland and almost 10% in Greece, indicating the range of different impacts within the 27 member countries.
Tuesday’s projections have been revised down by about 9% compared to the Commission’s latest forecast three months ago.
What’s Next: The forecast puts increased pressure on EU member states to come up with a fiscal stimulus plan that would help mitigate the gaps between countries based on their health situations, their lockdown exit plans, or their sensitivity to tourism. But EU leaders have failed so far to come up with a bazooka of appropriate size.
—Pierre Briançon
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Pfizer’s Covid-19 Vaccine Trial Begins in U.S.
People who are stuck at home got a bit of good news on potential Covid-19 vaccines and treatments.
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Pfizer (PFE) gave its first U.S. participants an experimental vaccine it’s developing with German biotech firm BioNTech (BNTX).
Gilead Sciences (GILD) says it’s in talks with “leading chemical and pharmaceutical manufacturing companies” about producing its remdesivir drug to treat Covid-19 patients in Europe, Asia, and the developing world.
What’s Next. It wasn’t all good news. The University of Washington’s Institute for Health Metrics and Evaluation doubled its U.S. death toll estimate. The institute now says deaths could approach 135,000 by early August.
And some of America’s most prominent public-health doctors say the U.S. must conduct about 4 million coronavirus tests a week to prevent the disease from spreading as states relax restrictions, The Wall Street Journal reports. That is more than twice the amount the U.S. is doing weekly.
--Connor Smith
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Oil Surges Back
The price of the world’s most heavily traded commodity has risen for five straight days. The remarkable rally saw oil jump 10% on Tuesday, but the dismal context for the gains was also made clear by the closing price of just $25 a barrel.
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Most producers still can’t make money at these prices even on wells whose capital costs have already been paid off.
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Nearly all U.S. energy stocks are down by double-digit percentages so far this year.
“The rebound is a kind of a sigh of relief for the industry. Mass bankruptcies look unlikely, at least in the short term.” – Avi Salzman, Barron’s reporter
What’s Next: A wide swath of energy stocks have gained recently, as Wall Street hopes that oil’s price increases will help almost every part of the vast oil complex, from producers to refiners to pipeline operators, get back on a path to profits.
—Ben Walsh
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The Meat Shortage Is Getting Real
Nearly one in five Wendy’s locations is sold out of beef, according to an analyst at Stephens, as the meat processing industry continues to face huge disruptions from outbreaks of Covid-19 among its workers.
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The U.S.’s hog slaughtering capacity has dropped by about half since the pandemic began, Tyson (TSN) president Dean Banks said Monday.
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President Donald Trump signed an executive order last week invoking the Defense Production Act in an attempt to keep meat plants open.
What’s Next: Most likely, rising prices. A Sysco (SYY) executive went even further on a call with analysts, saying inflationary pressure would “without a doubt” be seen in meat prices.
—Ben Walsh
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Disney Is the Unhappiest Place on Earth Right Now and 5 Other Things to Know This Morning - Barron's
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