Disney Stock Trades Near 2024 Low Ahead of Earnings
Disney Stock Trades Near 2024 Low Ahead of Earnings
That may attract value buying for long-term bulls, but a drop below the level could trigger selling
- Disney is scheduled to report earnings on Wednesday, Aug. 7, before the market opens.
- The stock price is nearly unchanged from start of the year after several months of losses.
- Options market shows an expected move of +/- 5.97 points, or 6.6% of the stock price.
The Walt Disney Company (DIS) is scheduled to report its third-quarter fiscal earnings on Wednesday, Aug. 7, before the market opens. A conference call with management will take place at 8:30 a.m. EDT.
Disney stock is down more than 27% from its 2024 high of 123.74 set back in March. On May 7, Disney stock fell 9.51% after reporting second-quarter earnings, marking the biggest daily percentage decline since November 2022. The company got off to a solid start in 2024 after a solid first-quarter earnings report, but enthusiasm quickly faded. Will the Q3 numbers offer a turning point for the stock?
Disney Earnings: What are investors watching for?
Investors will be focused on Disney’s Direct-to-Consumer (DTC) segment, which includes its streaming services and global advertising sales. Last quarter, Disney softened its outlook for DTC despite Disney+ and Hulu posting profits for the first time ever. ESPN+ contributed $18 million in losses to the segment. Markets will want to see profit sustainability in DTC and, preferably, stronger guidance from management in the Q3 report.
Disney’s Experiences business segment, which includes theme parks, is another closely watched segment. Management expects the segment’s operating income to be about the same as last year, but to see growth for the full year. Last quarter, Disney made an operating income of $2.3 billion in the segment.
Analysts’ estimates for third-quarter earnings per share (EPS) stood at $1.18 today, per Yahoo Finance. That would represent an increase from $1.03 a year ago. Analysts see revenue at $23 billion, compared to $22.3 billion a year ago.
Disney has beaten EPS estimates in four of the last four earnings reports. But, as we saw last quarter, a beat doesn’t guarantee the stock price will react positively. Investors want to see a solid quarter for DTC, combined with a positive outlook.
Trading Disney into earnings
Disney stock traded around 90 today, just above the 2024 low of 88.69 back in January. That may attract some value buying for those who are long-term bullish on the stock. Alternatively, a drop below the level could trigger some additional selling.
The implied volatility rank (IVR) for Disney trades at 64.5, indicating it’s elevated compared to the past year. The Aug. 9 options expiration shows an expected move of +/- 5.97 points, or 6.6% of the current stock price.
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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