Walt Disney Potential Buy If Earnings Miss Price Decline

Market is expecting Walt Disney to report earnings of $1.10 per share, up 18.3% year-over-year (YoY), on revenue of $22.1 billion (+1.4% YoY).

What investors would be looking for in this upcoming earnings release would be the proxy battle against activist investor Nelson Peltz on the Disney Plus password-sharing crackdown that is set to begin in June.

We can see that why this might be in focus because Disney streaming business performance have been in question and there need to be a sense of urgency to get the revenue flow more aggressively and fast. This also include other priority like finding partners for ESPN's digital evolution.

I believe there are many ideas being given to the CEO but how would Disney be managing these and this is crucial for Disney future growth.

Disney+ had over 149.6 million subscribers globally as of 2024, a drop of 0.6 million subscribers from Q4 2023. This is the fourth time Disney has lost members. Earlier, Disney+ witnessed a drop of 2.4 million in Q1 of 2023, 4 million subscriber loss in Q2 of 2023, and 11.1 million in Q3 of 2023.

That is the third consecutive time the platform has seen a drop in subscriber growth since its launch in 2019.

So in this upcoming earnings, on the streaming side, investors will be watching the net subscriber addition numbers for Disney+, ESPN+, and Hulu.

If we looked at the price ARPU increase due to heightened competition and macroeconomic pressures, we will also need Disney to show subscriber growth over price increases.

If we looking at the trading session since April, we will notice that Disney is trading in a descending triangle pattern, this would mean that traders might be taking a short position to accelerate a breakdown.

But we could also look at it with other indicators, like MACD and KDJ, we could see that MACD might be making a crossover, and there have been increasing demand (buying) as seen from KDJ green.

This might mean technical traders would have the opportunity to make substantial profits over short period if the earnings miss and we could see price decline.

If we were to look at how Disney would be focusing in this upcoming earnings, with the proxy process behind it, the management will focus on operations, financial rigor, management succession and the implementation of a consistent long-term strategy.

I would think that there will be short position taken by traders which might drive the price lower, and this might be an opportunity to buy, and wait for Disney to get out of a pullback.

Appreciate if you could share your thoughts in the comment section whether you think Disney price would drop if their earnings miss, and this might be a potential buy.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.