Walt Disney Co. (DIS) - Get Walt Disney Company Report shares slipped lower Thursday after the company said it would delay the re-opening of its hotels and theme parks in the state of California amid a new surge in coronavirus infections.
Disney said it will publish a new re-opening schedule early next month after it receives new guidelines from state officials in Sacramento. Disneyland Park and Disney California Adventure Park had been slated to re-open on July 17, but two consecutive days of record infection rate increases have forced health authorities, as well as Governor Gavin Newsom, into a more conservative strategy.
The decision could also raise questions over the fate of the NBA's playoff plans, slated to begin next month at Walt Disney World in Orlando.
"Given the time required for us to bring thousands of cast members back to work and restart our business, we have no choice but to delay the reopening of our theme parks and resort hotels until we receive approval from government officials,” the company said in a statement.
Disney shares were marked 2.5% lower at $109.33 each in early Thursday trading, a move that would extend the stock's year-to-date decline to around 24.5%.
California is one of 30 states where case numbers are growing by 5% or more based on a 7-day average, according to a CNBC analysis of data compiled by Johns Hopkins University. The state’s seven-day average of new Covid-19 cases increased nearly 46% compared with a week ago, CNBC reported.
Disney also operates four theme parks at its Walt Disney World Resort in Orlando, Florida -- which bring in more than 150 million visitor each year -- and has planned a phase re-opening that is slated to begin on July 11.
The Florida sites are also expected to host the National Basketball Association's truncated playoffs, a 22-team tournament that was approved by league owners on June 4.
Training is slated to begin on July 9, with players placed in what the league has called 'isolation housing' on the Disney campus as part of the state of Florida's quarantine rules for new arrivals.
Florida's confirmed coronavirus case tally has risen to 109,000 this week, following a record increase of 5,508 on Wednesday.
“Now they are testing more than they were, for sure, but they’re also testing positive at a higher rate than they were before,” Governor Ron DeSantis said Tuesday. “So that would tell you, there’s probably been an escalation in transmission over the last seven to 10 days.”
Disney began closing its theme parks in January as the coronavirus began to take hold in China, where it operates Shanghai Disneyland, while Disney’s U.S. theme parks have been closed since mid-March.
In the financial year ending in September 2019, Disney said its Parks, Experiences and Products division, the company's largest, generated $26.3 billion in annual revenue.