Disney share price slumped hard in extended hours after the company published weak quarterly results. DIS crashed to a low of $89.11, which was the lowest level since April 2020. It has crashed by more than 51% from its highest level in 2021, giving it a market cap of over $179 billion. At its peak, the company was valued at more than $357 billion.
Walt Disney concerns remain
Disney is a giant conglomerate in the entertainment industry. It is a vast company that owns tens of businesses, including ABC, ESPN, National Geographic, and Pixar among others. Disney has a presence globally.
Disney published results that missed analysts forecasts badly. Its total revenue rose by just 8.7% year-on-year to over $20.1 billion. That figure was more than $1.2 billion lower than what analysts were expecting. Its earnings per share of 30 cents was also significantly less than what analysts were expecting.
The closely-watched Disney+ did well, with the product adding over 12 million subscribers. 9 million of these were core Disney+ members while Hulu and ESPN+ added 2.5 million members combined. The company’s parks division was hit by the recent Hurricane Ian in Florida while demand for its cruise line business was significantly better than expected. It was also hurt by the lockdowns in mainland China and Hong Kong.
A likely catalyst for the Disney share price is that the company expects that its cash spend on content has peaked. It spent over $30 billion in content in its fiscal year and expects it to be less than that in the coming year. Disney expects that its capital expenditure will increase by about $5 billion in the next fiscal year.
So, is Disney stock a good buy? Disney faces numerous challenges ahead. First, its mainland China and Hong Kong businesses are struggling due to Covid-zero. Second, there are signs that its streaming business is starting to slow. Most importantly, the ad business is also facing challenges as companies shift to cash preservation.
Disney share price forecast
The daily chart shows that the DIS share price has been in a downward trend in the past few months. This has made it one of the worst-performing Dow Jones constituent stocks. The sell-off continued during the American session and moved below all moving averages. The Stochastic Oscillator has moved below the oversold level.
Therefore, there is a likelihood that the Disney share price will continue falling as sellers target the key support level at $80. The stop-loss for this trade is at $105.
