Walt Disney Company (NYSE:DIS) has had a great time in the market through the first 4 months or so of 2017, and for several very good reasons. Improving economic conditions, bullish opinions overall fueled by the election of Donald Trump, and stock buybacks that were announced last year are just a few reasons investors have been excited about the stock lately. However, times are quickly changing on the geopolitical level, and that could be a major threat to the company.
Geopolitical Times Are Changing
While Walt Disney has been on the right track for some time now, that may all change, and it could change very soon. The primary reason for this has to do with a change in tides in the world of geopolitics. At the moment, geopolitical tensions are growing around the world, we’ll get into what that means for Disney in a minute. For now, let’s discuss what’s actually happening…
The Middle East is a major topic of discussion at the moment, but that should be of no surprise, it has been for quite a while now. However, the tensions in Syria, Afghanistan and other Middle Eastern nations is growing. In fact, just a short while ago, the United States launched missile strikes on Syria and just after that, it dropped its largest non-nuclear weapon on a series of tunnels in Afghanistan. However, even this isn’t the biggest geopolitical story at the moment.
The biggest geopolitical story hitting headlines at the moment has to do with North Korea. You see, on the country’s 105th “Day of the Sun”, North Korea held a parade. The parade was centered around showing off the country’s abilities with regard to war, in particular, showing off a new intercontinental missile and a new submarine launched missile; both of which could be fitted with nuclear warheads. This has led to talks of a potential nuclear war between North Korea and the United States. This could also lead to nuclear war between North Korea and China, which China has openly stated it is seriously concerned about.
What Does This Have To Do With Disney?
At first glance, it may seem as though the geopolitical unrest around the world has little to nothing to do with Walt Disney stock. However, that couldn’t be further from the truth. The reality is that Walt Disney is an entertainment company. One with television networks, movies, theme parks, and much, much more. However, a big part of Disney’s revenue is made through travelers visiting their various destinations. During times of geopolitical unrest, we tend to see less travel, which means less revenue for Walt Disney.
On top of that, during times of war, economic conditions tend to falter. Because Disney is an entertainment company, their products are some of the first expenses cut by consumers when economic conditions take a dive. At the end of the day, geopolitical unrest could turn out to be a major concern for Disney investors.
What Traders Should Be Watching For Ahead
Moving forward, there’s no doubt in my mind that there will be several opportunities for traders. However, if you want to take advantage of these opportunities, you’re going to need to stay on top of the news. In particular, keep a close eye on geopolitical tensions around the world. Any updates to the stories mentioned above will likely lead to movement ahead.