Walt Disney Co (NYSE: DIS) is in focus this morning after announcing plans to build a new theme park and resort in Abu Dhabi.
Disney has partnered with Miral, a UAE-based immersive destination and experiences company, to build its 5th theme park outside of the United States that will reportedly include a “lot of new experiences”.
On Wednesday, the mass media and entertainment giant reported market-beating earnings across the board for its second financial quarter as well, pushing its share price up more than 10% on market open.
What makes Abu Dhabi a suitable location for Disneyland?
Disney has picked Abu Dhabi as the destination for its next theme park as the UAE is “the crossroads of the world,” the company’s chief executive, Bob Iger, told CNBC in an interview on Wednesday.
According to Iger, more than 500 million people who can afford a visit to Disneyland “live within a 4-hour plane trip” to the United Arab Emirates.
In fact, about 120 million people are estimated to “come through Dubai and Abu Dhabi” in 2025.
So, the new theme park and resort will likely drive massive demand and contribute significantly to Disney’s financials over time.
All in all, opening shop in the UAE is like “putting a Disney theme park right in the backyard of a whole new consumer base,” Iger added.
Building theme parks tends to boost Disney’s brand perception
Disney turned to Abu Dhabi to build a new theme park in search of the “right partner” with whom it could “negotiate the right deal” – and the NYSE-listed firm has found it in Miral, said Josh D’Amaro, its chairman of experience, in a CNBC interview today.
Building a Disneyland in the UAE will enable the multinational based out of Burbank, CA, to strengthen its footprint in a part of the world that it has “only reached superficially,” according to Bob Iger.
Iger also confirmed that setting up a theme park outside of the United States has so far resulted in a material boost to Disney’s brand perception.
A nearly 1% dividend yield makes Disney stock all the more exciting to own in 2025.
Why else is the Miral deal significant for Disney?
Disney will be in charge of the creative endeavours and the overall design of its UAE theme park, but Miral has agreed to fully fund the project.
Note that Disney is committed to spending up to $60 billion to turbocharge its experiences business over the next 10 years.
However, the Abu Dhabi development is not a constituent of that commitment.
In fact, with Miral funding the new project, Disney will get to stay on track with its plans of investing in the US and creating thousands of new jobs, Iger confirmed on the CNBC interview.
Despite today’s surge, Disney stock is down more than 10% versus its year-to-date high.
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