Disney stock has dropped 17% on streaming worries, fight with Florida. Is now the time to buy?
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Disneyâs (NYSE:DIS) shares have taken a hit in recent weeks amid negative headlines about its battle with Florida lawmakers over a controversial education law. This has added to broader worries that the streaming market has run out of gas, cutting into the prospects for the company's Disney+ product. 
While DIS has received a lot of attention lately, its decline represents part of a wider industry downturn. For the month leading into Tuesday's close, Disneyâs stock has tumbled 17%. In comparison, shares of Warner Bros. Discovery (WBD) have plunged 28% and Paramount Global (PARA) have sunk 24%. Comcast (CMCSA), which owns Disney rival Universal, has fared significantly better, with shares slipping 5%.
Given the recent slide, is now the time to buy DIS?
Culture wars in Florida are still raging
Some of the decline can be attributed to concerns about the entertainment companyâs relationship with the State of Florida, home to one of its most powerful revenue generators, Disney World. While it generally avoids controversy, Disney has found itself embroiled in a culture war with Florida lawmakers over a new law aimed at discouraging the discussion of gender identification and sexual orientation in Florida schools.
After initially remaining quiet on the matter, Disney management eventually spoke out against the measure, sparking backlash from the lawâs supporters, which include Florida Gov. Ron DeSantis.
In response to Disneyâs opposition, the Florida legislature moved to strip Disney of a special tax district in central Florida called Reedy Creek that was created in 1967 to help support the creation of Disney World, now one of Floridaâs largest employers. The special status allowed Disney broad autonomy over the land, including the ability to issue municipal bonds for infrastructure and utility projects.
But analysts say the move will hurt local taxpayers more than Disney as theyâll now have to absorb costs that had previously been picked up by the company. Orange County, where most of Reedy Creek is located, will also have to take on some of the special districtâs financial obligations, including a $1B bond, according to a recent note by Deutsche Bank.
Deutsche Bank added that it believes Disney and Orange County will be âhighly motivatedâ to hammer out a new deal that essentially preserves the status quo. It also noted that Disney has been able to successfully operate its other theme parks without the benefit of a special tax district.
Also spooking investors was the release of Netflixâs quarterly earnings report which showed an unexpected drop in subscriptions, fueling concerns that the streaming sector was hitting a wall. Netflix shares sank over 30% on the news and pushing down shares of other streaming providers, including Disney (DIS).
But theme parks are bouncing back
Wall Street analysts, meanwhile, appear to be unfazed by the negative headlines.
BofA Securities said that they saw the stock's decline as an opportunity. "While one can approach valuation multiple ways, it appears that the market is pricing in the most bearish scenarios at current levels," they wrote in a note dated April 20. 
BofA Securities also noted that Disney was seeing âsignificantâ recovery in its lucrative theme park business âwhich should de-risk the P&L near-term.â
Morgan Stanley was particularly bullish about Disneyâs theme park business in a note dated April 7, proposing that the company âmay be in year one of a historically strong period of growth for its parks business.â Drivers include pent-up consumer demand, the implementation of technology to help control labor costs, a revitalized Epcot, and the addition of new cruise ships.
Wall Street analysts, on average, rated Disney as a Buy as of April 26. Of the 29 analysts tracked by SA, 15 rated the stock a Strong Buy, seven a Buy and seven a Hold. No one rated the stock as Sell. SA authors also rated the stock a buy, on average.
Likewise, SAâs Quant Ratings for Disney (DIS) saw the stock as a Buy as of April 26. The company received an A for growth, an A- for profitability and revisions, a C- for momentum and a D for valuation.
For a more in-depth view of Disney, check out SA contributor JR Researchâs âDisney: Return to Pre-COVID Profitability Days Will Be Challengingâ or SA contributor Trapping Valueâs âNetflix Disaster Paves Way for Disney to Find a Streaming Partner.â