Walt Disney Issues Performance Warning, Raises $6 Billion in Debt Offer

Walt Disney Co. (DIS) has raised almost $6 billion in a debt offering, as the impact of the coronavirus outbreak is putting its cash flow position under strain.

COVID-19 will make it more challenging for management to “estimate future performance of our businesses” over the near to medium term, the entertainment giant said in a Securities and Exchange Commission filing. “The impact on the capital markets could impact our borrowing costs”, the company said.

Walt Disney has closed theme parks, suspended cruises and theatrical shows, delayed theatrical distribution of films both domestically and internationally, and experienced supply chain disruption and advertising sales impacts. It also had to cancel certain sports events and shut down the production of most film and television content.

Analysts are upbeat about Walt Disney as 16 out of 20 recommend investors buy its shares, resulting in a Strong Buy consensus rating. Shares plunged 9.4% to $85.98 a share in U.S trading on Friday. At an average price target of $146.42, analysts see room for a potential 70% upside to the stock in the coming year.

“Our businesses could also be impacted should the disruptions from COVID-19 lead to changes in consumer behavior,” Walt Disney said. “There are certain limitations on our ability to mitigate the adverse financial impact of these items, including the fixed costs of our theme park business.”

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