I’m looking at Disney and they are struggling. Their earnings this last quarter reported Nov 10 were terrible. And not just terrible, but less than 50% below the previous quarter. The stock is responding in kind. Right now, Disney is at the breaking point. A crucial level of previous resistance and demand is acting as resistance around 153. If DIS breaks 151.5, I expect a landslide.
I would encourage you to read their latest earnings report. It’s pretty dim.
Some highlights.
Disney+ is growing at 60% YoY
Hulu is growing 20% YoY
They lost a lot of revenue from cancelled sporting events, theatre, and parks
They lost 1B complying with gov’t regulations, especially in regards to COVID
They lost a lot due to delayed and cancelled movies and shows
They are still incurring costs related to an ongoing massive reorg initiated in Oct 2020
Free cash flow decreased from 3.64B to 1.99B (54% decrease)
This means that any hope of a dividend resumption are probably off the table for a long time. People thought Disney was on the up and up as the pandemic wanes and their earnings were recovering over the past year (-0.2 => 0.32 => 0.79 => 0.8 EPS in prior quarters). This report at 0.37 EPS has killed those hopes.
The RSI is super oversold here, so I’m going to wait and see what happens. But on a 151.5 break downwards I’m buying puts. I could see it going as low as 130s. So I would be buying 17 Dec 21 130P. Or whatever is about 2-3 wks out from when it breaks.
I was making a hopeful play on Disney this week that just didn’t pan out. Typically after earnings there’s a period of dormancy and regression followed by explosive growth, however it just didn’t happen this time. Disney+ day had enough issues that it didn’t give it the shot in the butt it needed to grow. National Disney Day is the 6th, but that’s not exactly a momentous occasion for them. I’m thinking they’re going to need some good news in order to break this slump.
I like mid-December puts targets for this one though. I think you could see 150 failed support within the next couple trading days based on it’s slow bleed out this past week, personally.
