Walt Disney Co. (NYSE: DIS) is tiptoeing into reopening its theme parks with moves in China and Florida. Facing heavy losses, the Los Angeles-based company is under pressure to bring guests back.

Between Disneyland, Disney World, and theme parks around the globe, the company normally hosts 160 million visitors each year. With the gates closed, Disney lost about $1 billion in revenue during the recent quarter.

One of the Dow components hurt the worst by this COVID-19 pandemic, Disney shares are down 27% year to date. The company recently scrapped its next dividend, which saves about $1.6 billion.

China First

Shanghai Disneyland plans to reopen Monday after being closed since late January. Parks in Tokyo, Hong Kong, Europe and the U.S. closed later.

By March, coronavirus cases were going down in China, so the park opened a few retail and dining establishments then. It’s a model Disney appears to be considering for its other facilities: open a few small food and shopping outlets on the periphery, learn from the experience, and then move to a full reopening.

With the full Shanghai park reopening, guests should expect a very different experience, including a new advanced reservation and entry system designed to limit capacity. The park typically hosts 80,000 visitors per day, but the Chinese government is limiting that.

“Roughly they want us to be at about 30% of that,” said CEO Bob Chapek on an earnings call earlier this week. “So it’s 24,000 a day. We’re going to actually open up far below that just to have our training wheels on with our new procedures and processes to make sure we don’t have any lines backing up either as guests entering into the park or as they wade through the park.”

The problem for Disney is that even if they can get all their global parks reopened, they’ll be operating way below capacity for the foreseeable future, an obvious drag on revenue. And the bigger psychological question (will consumers feel comfortable visiting?) remains to be answered. One clue: Tickets for Shanghai’s opening week sold out quickly when they became available today.

Dr. Pamela Hymel, Disney Parks Chief Medical Officer, said social distancing rules would be enforced at Disney facilities around the globe. Standing in lines is a necessary part of the Disney experience, so the company is thinking hard about that. “We’re also exploring ways to use technology to aid us in these efforts, like with our Play Disney Parks App and through virtual queues at Disneyland and Walt Disney World,” she said.

In Shanghai, masks will be required for guests and employees. Guests will have their temperatures checked before entering the park. Enhanced cleaning is a major focus, of course. And hand sanitizers and hand-washing stations have already been added worldwide.

Florida Will Be First in U.S.

In the U.S., Disney’s first move is a phased reopening of Florida’s Disney Springs, an outdoor shopping, dining and entertainment complex on May 20. Other parts of the Walt Disney World Resort remain closed for now, including theme parks and hotels. Florida is one of the states that imposed less stringent restrictions in response to COVID-19, and it was one of the first to move toward reopening.

The company’s experiences with Disney Springs will inform how and when other sections reopen. “Following the guidance of government and health officials, a limited number of shopping and dining experiences that are owned by third-party operating participants will begin to open during this initial phase,” said Disney Springs VP Matt Simon.

Simon outlined new safety measures for the partial reopening of Disney Springs. They include “increased cleaning procedures, the use of appropriate face coverings by both cast members and guests, limited-contact guest services and additional safety training for cast members.”

The complex will also limit capacity, parking and operating hours. It’s not clear if Disney Springs will require all customers to wear masks as the company does in Shanghai. The wearing of masks has become a political hot topic in America, with some arguing that individuals should be free to make that decision. The state of Florida has not required them.

Overall Prospects

Despite Disney’s challenging situation, most stock market analysts list it as a “buy” or “hold.” In the recent Disney earnings, the company saw revenue growth in its other divisions: media networks, studio entertainment and direct-to-consumer.

Disney+ topped 50 million subscribers worldwide, as reported in its earnings report. Investors looking at Netflix Inc. (NASDAQ: NFLX) might also consider Disney stock as the company’s subscription entertainment services grow. Netflix stock is a lot more expensive, and Disney offers diversification beyond streaming services.

The company has been creatively programming during the pandemic lockdown. While movie theaters are closed, Disney is moving some new theatrical releases, such as “Artemis Fowl,” to debut directly on Disney+.

In the absence of live sporting events, you might think ESPN viewership would tank. But sports fans, with more time at home, have been eager to watch anything sports related. Overall viewership among 18-49 year olds was up 11% over last year.

The network pushed its 10-part Michael Jordan series, “The Last Dance,” into early release. It quickly became the most-watched ESPN documentary of all time. The virtual NFL draft also drew its largest audience ever, with over 55 million viewers.

Some sports analysts predict the return of live games in a few months, though probably without live audiences. Shelter-at-home fans are likely to tune in at historic numbers.

Is it time to buy Disney? If you believe things will eventually return to normal, Disney’s stock price might be considered a bargain right now. Currently trading in the $107 range, the stock 52-week high is $153.41.

Disney’s powerful brands are another argument for long-term investing. “One key to our resilience is the strength of our brands and the strong emotional connection people have to them, Disney, Pixar, Marvel, ABC, ESPN and Star Wars,” said Disney Chairman Robert A. Iger this week.

Iger is bullish on the future. “We believe people will resume familiar activities once this crisis ends,” he said. “They missed doing the things they enjoy, things that make them feel happy and connected with family and friends. Whether it’s going to movie theaters to see our films or visiting our theme parks around the world or watching live sports on ESPN, people want good news.”

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