Shanghai Disneyland Resort Temporarily Closes Due To COVID-19 Surge: Could It Hurt The Mouse's Growth Momentum?

An international theme park is closing temporarily due to a surge in COVID-19 cases. Here’s a look at what the move could mean for The Walt Disney Co (NYSE: DIS).

What Happened: Shanghai Disneyland Resort is temporarily closing due to a surge in COVID-19 cases in China. Shanghai is one of several cities in the country seeing a sharp increase in positive cases. The park had previously operated under reduced capacity earlier in March prior to the complete closure.

Shanghai Disneyland Resort was previously closed from January 2020 to May 2020.

The move follows China’s other Disney park Hong Kong Disneyland, which announced a temporary closure on Jan. 7, 2022.

The move by Disney follows other companies including Tesla Inc (NASDAQ: TSLA) that have temporarily suspended operations in regions of China with increased COVID-19 cases.

Related Link: Disney Q1 Earnings Highlights: Parks Segment Up 100%, Disney+ Hits 129.8M Subscribers, ARPU Increases 

Why It’s Important: The temporary closure of the Disney park comes as the Parks, Experiences and Products segment has posted two straight quarters of revenue growth of 99% or more for Disney.

First-quarter revenue for the parks segment was $7.2 billion, up 100% year-over-year. International parks revenue was $861 million, up 128% year-over-year. Hong Kong Disneyland Resort was open for 68 days in the recently reported first quarter versus 42 days in the prior year.

Shanghai Disneyland was open the entirety of the first quarter and the prior year’s first quarter.

The closure of the two Chinese parks could greatly impact revenue for the parks segment in the second and third quarter, depending on the length of the closures.

The parks segment had been a bright spot for Disney’s financials, but could face some challenges moving forward.

DIS Price Action: Disney shares were down 1.7% at $137.91 Monday morning.