The Market is Roaring Higher and Disney Isn't Really Taking Part
By:Mike Butler
Disney will report quarterly earnings Thursday before the market opens. DIS stock is finally in positive territory for 2024. After opening the year at $90.10, it’s sitting about 10% higher at around $99 per share. This has not been without volatility, though. The stock has reached a high of $123.74 and a low of $83.91 this year. Disney had a strong earnings report last quarter, beating earnings per share (EPS) and revenue estimates for the first time in three quarters.
Disney is now expected to report a reduced EPS figure of $1.11, and a reduced revenue figure of $22.49 billion in revenue on Thursday.
While DIS stock has recovered from the lows, it still has a way to go before re-touching 2024 highs.
Robert A. Iger, CEO of Disney, offered strong remarks in the last earnings call: “Our performance in Q3 demonstrates the progress we’ve made against our four strategic priorities across our creative studios, streaming, sports, and Experiences businesses ...”
He went on to day that “... this was a strong quarter for Disney, driven by excellent results in our Entertainment segment both at the box office and in DTC, as we achieved profitability across our combined streaming businesses for the first time and a quarter ahead of our previous guidance. Despite softer third quarter performance in our Experiences segment, adjusted EPS for the company was up 35%, and with our complementary and balanced portfolio of businesses, we are confident in our ability to continue driving earnings growth through our collection of unique and powerful assets.”
Disney has a strong brand name, and key metrics keep the entertainment giant afloat but investors clearly want to see a more positive trajectory for 2025 after falling so far from the stock price highs of earlier this year.
When we examine the implied volatility of DIS stock, we see a relatively high expected stock price move through this week's options expiration cycle. We can derive expected stock price moves from the options market, and in the case of Disney earnings we should expect a stock price range of +/- $6.53 for this week. This is about 6.5% of the stock price in notional value, which is in the middle of the road for most earnings announcements that fall between 5%-10% of the stock price. Looking to the end of the year, though, we see the December cycle has an expected stock price move of +/- $8.26. That means most of the implied volatility is being priced into this weekly options cycle, which is interesting.
If you're bullish on DIS stock for earnings, you're looking for another EPS and revenue beat, with a strong forecast for 2025. There have been some volatile segments within the business this year, but a strong forecast and exceeding earnings estimates back to back could result in a strong stock price move—especially in this very bullish time we're in right now in the general market.
If you're bearish on DIS stock for earnings, you're looking for more turbulence within the business sectors, and you're looking for results to fall short of estimates this quarter. The fact that the stock market is roaring higher and Disney isn't really taking part is somewhat telling of where investors are willing to park their cash.
Tune in to Options Trading Concepts Live tomorrow for an in-depth look at options trading strategies ahead of Disney earnings Thursday morning!
Mike Butler, tastylive director of market intelligence, has been in the markets and trading for a decade. He appears on Options Trading Concepts Live, airing Monday-Friday. @tradermikeyb
For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.
Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.
tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on tastytrade.com/disclosures.
tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.
tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.
tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.
© copyright 2013 - 2024 tastylive, Inc. All Rights Reserved. Applicable portions of the Terms of Use on tastylive.com apply. Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastylive’s podcasts as necessary to view for personal use. tastylive was previously known as tastytrade, Inc. tastylive is a trademark/servicemark owned by tastylive, Inc.