“Avatar: The Way of Water” failed to reverse Walt Disney Co.’s recent spark, which has the stock on track for its worst year since 1974.
Disney shares DIS, -4.77%, slid nearly 5% on Monday to its lowest level since March 2020 after the blockbuster sequel and one of the most expensive films in Hollywood history fell short of the hype in its opening weekend. “Avatar: The Way of Water” grossed $134 million domestically and had the second-biggest worldwide premiere of 2022, but fell short of estimates based on US ticket presales and disappointed in one of the biggest Markets for the Franchise, China.
Disney had hoped to clean up in China, where the first theatrical film was doing blockbuster business in 2009. The Way of Water made $57.1 million there, which Disney described as disappointing but understandable in a Wall Street Journal report.
“The problem is that no one wants to go to a movie because they’ve been told COVID is extremely dangerous,” Tony Chambers, Disney’s global head of theatrical distribution, said in the article. “The cinemas are open, but the desire to go there is not really there.”
The news helped send Disney stock down 4.8% on Monday, the biggest drop of the day for a Dow Jones Industrial Average DJIA component -0.49%, to $85.78 — down two cents Disney’s lowest close since 2014. “Avatar’s” less-than-strong start is just the latest setback for Disney stock, which has fallen 44.6% this year, putting it on track for its biggest annual stock, according to FactSet percentage decline since 1974. The broader S&P 500 index SPX, -0.90%, is down 19.9% in 2022 and the Dow is down 9.9%.
Disney stock hit $200 a share at its pandemic-era peak in March 2021 after Chief Executive Bob Chapek announced early streaming success for Disney+. Chapek was replaced by predecessor Robert Iger last month after Disney missed revenue expectations by about $1 billion in its fiscal fourth quarter and issued a disappointing guidance.
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Iger returns with some lowered targets — Disney is now valued at $156 billion instead of more than $350 billion at its peak, and analysts have cut Disney’s earnings expectations for the new fiscal year by 20%. But this month’s Avatar ticket sales are expected to be the best-grossing quarter of the year for Disney’s movies business, which missed sales expectations by about $300 million last quarter.