Walt Disney (DIS 0.55%) encountered unprecedented setbacks as a result of the COVID-19 pandemic. Many of its most lucrative cash-generating operations were shut down to help slow the spread of the virus. Meanwhile, it suspended its dividend, reduced expenses, and went to the debt markets to borrow billions of dollars. 

The precautions it took to make sure it makes it to the other side of the outbreak seem to be working. Let's take a look at why the worst might be behind it and how Disney is mounting a comeback in July. 

A stock chart displaying the word comeback where stock prices should be.

Disney mounts a comeback in July. Image source: Getty Images.

Disney is not throwing away its shot 

At the height of the pandemic, all of Disney's theme parks were closed to visitors. Importantly, the segment that includes theme parks generated 45% of total operating income for the company in fiscal 2019. The shutdowns plugged up revenue from parks while some expenses associated with the parks continued. Remarkably, there is a chance that by the end of July, all its theme parks will be open to the public. 

Admittedly, the parks are still not near to being operated at full capacity, and its Disneyland Park in California delayed its planned July opening. However, the parks that have started allowing visitors are seeing robust demand. The reopenings turn on the revenue streams and generate increasingly important cash flow.

Moreover, the NBA is planning on resuming its season on July 30. The NBA will be a significant boost to viewership on Disney's ESPN network. Moreover, the league is housing its players at Disney's Orlando resorts, where they will stay through the completion of the NBA season.

Overall, during July, if all goes as scheduled, Disney will have completed the reopening of its parks in Florida, Paris, and Tokyo. Furthermore, its ESPN segment will get a boost from the restart of the NBA and MLB season, which will also resume in July. And, not to be forgotten, the release of Hamilton on Disney+.

The seamless simultaneous execution of the myriad tasks that were required to pull off this feat reflects well on management, staff, and all who were involved in the process. 

Fireworks in the night sky

Disney opens several theme parks in July. Image source: Getty images.

What this means for investors 

The progress Disney was able to make in July isn't necessarily an all-clear sign to investors to jump on board. There are still many things that can go wrong with the reopenings. Case in point: Disney had to close its Hong Kong park after reopening. The fact remains that Disney's business is still significantly dependent on bringing large groups of people together. It follows then that the fate of its earnings is going to be tied to the extent of the coronavirus pandemic in the foreseeable future.

Until there is a vaccine or treatment, or the outbreak runs its course, Disney will not be operating at its full potential. What's more, there is the ever-present risk of a flare-up in coronavirus cases near one of its facilities leading to shutdowns again. 

However, the comeback Disney was able to make in July remains impressive. And, when there is a return to normalcy, it will benefit from the pent-up demand that must be growing as families have been staying home for much longer than is comfortable.