Tariff Threats on Foreign-Made Films Are Rattling Disney. How Should You Play DIS Stock Here?
Disney (DIS) shares closed down on Monday, May 5 after President Donald Trump proposed a 100% tariff on foreign-produced movies that he dubbed a “national security threat” in a post on Truth Social.
Films made abroad are “devastating” the domestic movie industry, he noted, adding that his administration intends to bring creative content production back to the U.S.
Disney stock is down nearly 23% versus its year-to-date high.
Why Is Disney Stock Losing Ground?
Trump’s proposed tariffs on foreign-made movies could hurt a bunch of highly anticipated titles, including Spider-Man: Brand New Day, Mission: Impossible – The Final Reckoning, and Avengers: Doomsday.
According to Kathryn Arnold, a veteran Hollywood executive, the planned tariffs are “insane” as they could increase costs and gradually push low- to mid-budget films out of the market, potentially weighing on industry earnings.
Plus, other nations could retaliate with punitive levies and new restrictions aimed at hurting U.S. streaming platforms that have been growing at an accelerated pace in recent years as well.
The aforementioned concerns weighed on Disney on Monday.
DIS Shares Are Worth Owning Ahead of a Recession
Despite near-term challenges, Peter Supino, a Wolfe Research analyst, remains constructive on Disney stock as the risk of a tariffs-driven recession is priced in already.
“Squint across today’s valley of recession risk and you’ll see the Disney castle intact,” he told clients in a research note last month.
Supino has a $112 price target on DIS shares, which translates to more than 20% upside from here.
Wolfe Research has high hopes for the company’s streaming business. Plus, it has recently launched three new cruise ships that the investment firm expects will contribute about $800 million within the next few years.
Other Wall Street Firms Are Even More Bullish on Disney
What’s also worth mentioning is that Wolfe Research is actually one of the more cautious names on Disney stock.
The consensus rating on the mass media and entertainment behemoth currently sits at “Strong Buy” with the mean target of $124 indicating potential upside of nearly 35% from current levels.
On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.