Financial Advisors Eye Walt Disney as Stock Continues to Decline and Analysts Speculate on Potential Acquisition

The US stock market went on a rollercoaster ride last week, with major indexes registering some of the biggest one-day drops and gains since the 2008 global financial crisis. The spread of coronavirus across the world has investors on edge as more countries go into lock-down with borders shut and public places closed. Meanwhile, analysts and experts are worried that the spread of the virus could potentially push the US economy into the next recession.

Last week also marked the end of the longest ever bull market run lasting 11 years in the US markets. Despite recovering towards the end of the week with the largest rally since 2008, the large drops registered in the previous days resulted in all three indexes losing ground. The S&P 500 dropped by 5.33% and the Dow Jones Industrial Average slid by 7.23%. The tech-heavy NASDAQ Composite performed better, inching down by 1.06%.


The full impact of the coronavirus remains to be assessed as it’s still unclear when the outbreak will peak and for how long life will remain disrupted. Goldman Sachs suggests the US economy will remain flat in the first quarter and will drop by 5% in the second quarter. In the second half of the year, however, the economy is expected to recover, according to Goldman Sachs experts.


Meanwhile, the US government is putting measures in place to prevent an economic crisis. The Fed on Sunday set the interest rates close to zero and announced a QE program to sustain the economy. Major banks, such as Bank of America (NYSE: BAC), Citigroup Inc. (NYSE: C), Goldman Sachs Group Inc (NYSE: GS), Wells Fargo & Co. (NYSE: WFC) and several others said they would suspend buybacks until the end of the second quarter.


Let’s now dive into some companies that Financial Advisors were keeping an eye on last week. Despite the changes in overall market sentiment, it seems that Financial Advisors remain unphased as most of the stocks in their spotlight are the same as in the previous several weeks, according to data from TrackStar, InvestingChannel’s official newsletter capturing and analyzing the trends of Financial Advisors.


As the week before, the top three most-searched tickers among Financial Advisors are Tesla Inc (NASDAQ: TSLA), Apple Inc (NASDAQ: AAPL), and Microsoft Corporation (NASDAQ: MSFT). Apple and Microsoft both managed to appreciate amid the overall market decline, while Tesla dropped by more than 9%, continuing the slide that started several weeks ago.


At the same time, a number of stocks were newcomers to the list of most searched tickers. Among them, Colgate-Palmolive Company (NYSE: CL) ranked on the 17th spot. Given the threat of recession and the latest consumer trends driven by the epidemic, it’s not surprising that many investors put consumer staples like Colgate-Palmolive on their radars.


Another stock that got on Advisors’ radars last week was Walt Disney Co (NYSE: DIS). The company was the 11th most-searched ticker. Walt Disney’s shares went through a massive sell-off that resulted in a drop of over 30% in the last several weeks. Given the situation, it’s likely that the decline will continue.


Amid the coronavirus outbreak, Disney was forced to shut down all of its resorts and theme parks around the world until at least till the end of March. Theme parks are Disney’s largest business segment and closings will definitely impact the company’s revenue. In addition, the Disney Cruise Line has suspended all departures and the company’s entertainment and live-action productions were also put on hold.


At the same time, the movie industry is bracing for a tough time with box offices revenues expected near all-time lows as movie theaters will be closed for weeks. Even after they open, and we don’t know by when that will happen, it’s likely that fewer people will choose to visit them as the potential threat of virus contamination will still persist. Disney is likely to be affected, though its size suggests that it will be able to ride out the tough times.


However, as Walt Disney’s stock is going through a massive sell-off, some analysts suggest that it makes Walt Disney an attractive target for M&A. Last week, Rosenblatt analyst Bernie McTernan suggested that Apple might be interested in buying Disney as a way to boost its own streaming service with the addition of Disney+.

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