Did Disney's Shanghai Theme Park Surpass Expectations?

As per media reports, The Walt Disney Company’s (NYSE:DIS) new Shanghai Disney Resort, which opened its gates on Jun 16 has surpassed the company’s expectations.

The company’s parks and resorts division chairman Bob Chapek said the company not only outpaced the “financial results during the first 100+ days of operation” but also received positive feedbacks from the guests. Further, Bob Iger, Disney Chief Executive Officer added that the park is doing exceptionally well and he is quite confident that the company will do well in China .

However, as per the South China Morning Post, the resort is attracting 20,000 guests per day or approximately 7.3 million annually, which is only half of the numbers analysts had estimated.

The $5.5 billion Shanghai Disney Resort is the company’s second largest theme park and its first in Mainland China. The Hong Kong Disneyland, inaugurated in 2005, was Disney’s first foray into China.

Robust performance by the Parks & Resorts division continues to impress investors. The segment’s revenues grew 6% to $4,379 million in the third quarter of fiscal 2016, while operating income jumped 8% to $994 million.

Notably, the company’s operating income increased year over year for the 21st straight quarter. Increase in operating income at its domestic operations was due to rise in guest spending and decline in costs, marginally overshadowed by lower volumes.

Disney is focused on deploying its capital toward expansion of the Parks and Resorts business, thereby, increasing its market share and creating long-term growth opportunities. The company has high hopes for the Shanghai resort.

Disney currently has a Zacks Rank #3 (Hold).

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