The Magic Kingdom is raising its prices another $4 to $99 for a day pass at its Orlando park. Its other Orlando parks (Epcot, Animal Kingdom, and Hollywood Studios) are also seeing a $4 price hike. A decade ago, Magic Kingdom's admission cost less than $50.
According to CNBC contributor Andrew Busch, editor and publisher of The Busch Update, says Disney is trying to take advantage of the weather affecting much of the continental United States to make a few bucks more. Disney World's Orlando, Florida, location was relatively spared this winter from unusually cold weather and the snow that gripped many of America's most-populated areas.
"This is another great example of the polar vortex impacting the economy," says Busch. "This is a textbook microeconomic example of a company that is seeing demand being inelastic– or 'Frozen', as it were – in increasing prices to increase revenues."
Disney's theme parks took in $14.1 billion in the fiscal year ending September 2013. That's 31% of the company's total top line number. Park revenues have grown 9% or more annually over the past three years. However, Busch warns that that there's a limit to what Disney World can charge, in part because of competition from the nearby Universal Studios Theme Park owned by CNBC's parent company, Comcast.
"Disney is going to increase their revenues for the second-quarter," says Busch, "which is mainly when we're going to see the snowbirds go down there especially for spring break. But, they run the risk of eating into their earnings down the road as people will go to alternative solutions to a very expensive Disney. "
In the meantime, Talking Numbers contributor Richard Ross, Global Technical Strategist at Auerbach Grayson, is a buyer of Disney's stock.
"This is a stock you must own," says Ross, who notes that over the last six months, Disney has 30% return has trounced the benchmark S&P 500's 11%. He sees the stock as moving in a well-defined uptrend channel which recently shot up after breaking out of its January "flag" pattern and test of its technically-significant 100-day moving average. The stock is currently near its record high of $81.59 per share.
"I don't want to chase this stock in here too aggressively," says Ross. "Wait for a pullback because… you get these mini-countertrend pullbacks within the context of a much bigger beautiful bull market trend."
"History has shown us that you do get your chances in Disney," says Ross, "but those chances are few and far between and they're very sharp and sudden. So, you want to be a buyer on any weakness of this stock."
To see the rest of the discussion on Disney with Busch on the fundamentals and Ross on the technicals, watch the video above.