Disney Stock: Experts Argue Pros and Cons of ‘Buying the Dip’ Amid Trump Tariff Drama
Written by
Karen Doyle
Edited by
Rebekah Evans
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Recent announcements of sweeping tariffs have wreaked havoc on the stock market, wiping out trillions in market value of the many companies that rely on parts, materials and finished goods that are made overseas. Blue chip stocks like Disney are not immune from the downturn, but seasoned investors know that steep drops in the market can represent a buying opportunity.
What are the experts saying about ‘buying the dip’ the tariff announcements have created? Is Disney stock a bargain? Below is what you need to know.
Also find out if Apple or Disney is the best stock to buy.
Disney’s Many Sectors
Disney is the world’s biggest entertainment company and is a major player in categories like movies, television, theme parks, cruises and more. Fears of a recession had Disney down nearly 10% in the big ‘Liberation Day’ sell-off, according to The Guardian. Virtually all of Disney’s businesses trade in discretionary products and services, so a recession will likely hit the House of Mouse hard.
Disney CEO Speaks Out
Bob Iger, Walt Disney Company CEO, showed up unannounced at the daily editorial meeting of ABC News, which is owned by Disney, on Thursday, April 3. According to Status, Iger told the meeting of journalists that steel tariffs will drive up the company’s costs for building cruise ships, although he didn’t specify the amount of the increase. He also said that it would be impossible to quickly move overseas manufacturing to the U.S., even if the required factories are already here, as the company would need to hire and train skilled workers.
What Would Warren Do?
Legendary investor Warren Buffett is famous for his buy-and-hold strategy, which would indicate that buying the dip is a bad idea. But Buffett also said to “be fearful when others are greedy and greedy when others are fearful,” which would seem to support the idea of entering a market that many are fleeing. So, which is it?
While Buffett has not spoken out about the current dip in particular, investors watch his moves like a hawk. James Foord of Seeking Alpha notes that Berkshire Hathaway was sitting on a lot of cash at the beginning of the year and Buffett may have been waiting for an opportunity like this to buy. But Buffett still lives by his mantra of buying what you know and when he does buy in a dip, he will often increase his existing holdings rather than buy a new position he doesn’t already own.
This Isn’t Disney’s First Dip
Disney stock has been undervalued for a while, according to CNBC’s Jim Cramer. Cramer suggested buying the dip that Disney took earlier in the year, after reporting its Q4 earnings. Cramer felt that the positive results the company posted did not get a commensurate bump in share price, so he thought it was a bargain at that time.
Buying the dip can be a winning investment strategy if used judiciously, but trying to time the market, especially during volatility like this, is rarely a good long-term plan. Certainly, there are buying opportunities, but make sure they align with your overall investing goals.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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