Kyiv, Ukraine - March 9, 2021: Disney logo on the screen. The Walt Disney Company, commonly known as Disney, is an American diversified multinational mass media and entertainment conglomerate.
Disney share price rose by more than 6% on Monday as investors cheered the new era under Bob Iger. The stock jumped to a high of $100, which was about 13% above the lowest level this month. It remains about 52% below the highest level in 2021. This makes it the fourth-worst Dow Jones constituent after Intel, Salesforce, and Nike.
Disney stock price has been in a strong bearish trend in the past few months as concerns about the company remain. The situation was laid bare early this month when the company published weak financial results. Disney+ added 12.1 million new customers in the third quarter, bringing its total number of users to over 164.2 million users.
Disney+ has had a strong performance in the past few years considering it was launched just two years ago. In contrast, Netflix, which is available globally, has 223 million customers. However, the product’s growth happened at a hefty cost as it lost $1.4 billion in the quarter. It has lost $8 billion in its existence.
Disney also experienced challenges in its theme park division even as its revenue surged to over $7.4 billion. While the revenue and operating income was strong, it was relatively lower than expected.
Disney share price also collapsed because of the public perception of the company. Under Bob Chapek, Disney was seen as being woke. The situation worsened earlier this year when the company condemned the “Don’t Say Gay Bill” in Florida.
Therefore, investors believe that Bob Iger who led the company for 15 years. They expect that he will cut costs and position the company for growth. However, we believe that investors are getting ahead of themselves since Disney’s problems run deep. For example, it will take years for the company to repair its woke perspective since Iger was also seen as being woke.
The daily chart shows that the DIS stock price has staged a recovery in the past few days. It has moved from a low of $86.50 to about $100. As it rose, it moved above the important resistance level at $90.28. This means it has formed a double-bottom pattern. In price action analysis, this pattern is usually a bullish sign.
I suspect the stock will remain under pressure in the near term as the enthusiasm of Iger’s return fades. If this happens, the stock will likely retest the key support at $90.28. A move above the resistance at $108 will invalidate the bearish view.
This post was last modified on Nov 22, 2022, 07:22 GMT 07:22