Problems in the Magic Kingdom?

<p>What’s up with Walt Disney Co. (NYSE: DIS)? The company has recently reported very good news, but Disney’s stock price has actually fallen. Do shareholders have a reason to be worried? Or is Disney still in top form?

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Marvel’s Avengers: Endgame is now the most lucrative movie of all time, grossing over $ 2.79 billion. The Lion King was also a huge success, and it only had a record-breaking opening weekend of $ 185 million in July.

Furthermore, the long-awaited Disney + streaming service will be released in November. Many analysts believe that this service will take a large share of the market share from Netflix (NASDAQ: NFLX).

But despite all the good news, the price of Disney shares has pushed lower. I do not own a DIS warehouse, but if I did, this would affect me.

Wall Street still loves Disney

Most analysts on Wall Street love Disney. According to MarketWatch, 25 companies follow the company. Seventeen analysts value Disney shares as a purchase while seven have hold ratings. JPMorgan reiterated the “outperform” rating and Morgan Stanley believes that the result can be doubled in just five years.

In Tuesday’s remark, Morgan Stanley analyst Benjamin Swinburne said: “A huge execution challenge awaits Disney and its streaming ambitions, but its brands and content position give it a strong chance of success.” Nevertheless, DIS has stagnated over the past three months, increasing by only 2.4%. And since July 15, Disney’s stock has fallen 1.25%.

What gives?


My experience has been that when a company reports good news and stocks do not react well, it is a bearish indicator. It is quite possible that investors are worried Disney will lack earnings estimates when they report third quarter results on August 6.

Analysts are looking for Disney to report earnings of $ 1.75 per share of $ 21.49 billion in revenue. If Disney can’t connect, following a trend of revenue-free blue chip stocks, then expect profit seekers to move on with the stock.

If the DIS stock goes lower, look for support around the $ 131 level. This level served as support in May and will be a critical time to look ahead.

At the time of writing, Mark Putrino had no position in any of the above securities.