Disney (DIS) Stock: Will We See Gains In 2016?

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Walt Disney Co (NYSE: DIS)

Disney is an incredible company. They have made an art out of capturing the imaginations of consumers young and old. However, the stock has had a rough time since late November. So, what’s causing the declines and will we see gains on the stock in 2016? Today, we’ll talk about why DIS is falling and what we can expect to see moving forward.

Why DIS Is Declining

Disney is having a rough time, there’s no denying that. Since November 20th, the overall trend on the stock has been downward. So, what’s going on? Well, think about what Disney does. The company is heavily into the entertainment industry. Now, let’s take a look at the global economy. China, Europe, Brazil, Japan…. they’re all struggling economically. What is it that people do when economic conditions are in the dumps? They save! That’s exactly what’s hurting DIS.

The reality is that when economic conditions are far from promising, consumers start to do everything they can to hold onto their pennies. While reducing reliance on oil is one of the first steps, another one of those first steps is reducing entertainment expenses. As a result, Disney is likely to see less by way of sales in just about every economy around the world. Ultimately, this will affect the bottom line at DIS and will drive the value of the stock downward. That’s exactly what we’ve been seeing as of late.

Will DIS Have A Good Year Overall In 2016?

This is a rough call, and I hate to be the bearer of bad news, but I have to tell you what I’m thinking here. Unfortunately, I’m not expecting DIS to end in the green. Then again, I’m not expecting to see the majority of stocks on the US market or any other market end in the green. The simple fact is that there are several issues driving the global economy down, and until that economy picks up, we can’t expect to see gains in DIS. Here are the factors causing pain in the global economy:

  • China – China’s economy is struggling. This is bad news for DIS because it’s the world’s second largest economy, and one of the biggest consumers of Disney products. On top of that, China creates pressure for much of the world. That’s because China is the world’s largest importer of raw materials. So mining economies like the UK, Europe, and others are feeling the pain.
  • Oil Prices – Oil prices are also playing a role in the pressure we’re seeing on economies around the world. After all, the oil crisis is causing pain for countries that are heavily dependent on the production and sale of that commodity.

The bottom line here is that it took years to get into the economic position the world is currently in, and it’s likely to take quite a while for economies to recover. This is bad news for DIS because the company does best under solid global economic conditions. As a result, I’m expecting to see further declines on the stock over the foreseeable future.

What Do You Think?

Where do you think DIS is headed and why? Let us know your opinion in the comments below!

[Image Courtesy of Wikipedia]

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