Disney Slumped Post-Earnings, but Better Days Likely Ahead

Disney Analysis

The stock dropped nearly 10% on Wednesday, despite strong quarterly results, as markets likely focused on poor linear networks performance and underwhelming near-term guidance. Traditional media assets and saw a drop in both revenue and profits, while execs anticipate stagnant y/y operating income in the current quarter for the Experiences segment and a loss for Entertainment Streaming.^[1]

However, the company sees robust full year growth for the Experiences division, whereas the combined streaming financials continued to improve, subscribers increased and the company reiterated its goal to turn the business profitable in the calendar Q3. To combat a series of adversities, CEO Bob Iger has been implementing a turnaround plan, which already bears fruit and having fended off challenges by activist investors, the future looks promising.

These efforts have helped the stock to a relief-rally from the multi-year lows, with an approximately 35% Q1 advance. The latest results show that the form is delivering on its promises and this can help the stock resume its advance and take another crack at the 38.2% Fibonacci of its 2021-2023 plunge.

On the other hand, DIS.us rejected this pivotal level recently and Wednesday's slump brings it below the Ichimoku Cloud, exposing to the EMA200 (black line). This creates a precarious technical picture, as Closes below the EMA200 would negate the recent bullish bias and along with the Fibo rejection would bring the multi-year lows back in the spotlight (78.61).