Wednesday , 29 May 2024
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Global Economy

Disney Shares: When to Capitalize on the Post-Earnings Downturn

Disney's stock (DIS) is currently under substantial pressure, dropping nearly 9% following the recent earnings report, and hovering near its session lows. This downturn has brought the shares to multi-month lows as the entertainment behemoth's earnings announcement failed to impress investors.

Disney disclosed in-line earnings, marking a roughly 14% dip compared to the same quarter of the previous year. However, its revenue showed a 7.5% uptick, surpassing analysts’ predictions.

Investors were further disheartened by the performance of Disney’s streaming services, which lost 4 million subscribers within the quarter, despite still having over 157 million paid subscribers. These results point to the ongoing challenges the company is grappling with.

As Disney’s shares continue to tumble, investors are questioning where potential support may emerge. Let’s delve into the stock chart for a closer look.

Analyzing Disney’s Stock Performance Post-Earnings

With Thursday’s drop, Disney’s stock has pierced through the April low of approximately $96.50, falling below the uptrend support (blue line). This indicates that the stock failed to overcome the $102 threshold, which appeared promising earlier this week.

Despite Disney’s long-term potential and solid business model, it’s understandable why its shares are struggling, especially given the looming threat of a recession.

As shares continue to decline, investors must identify potential support levels. Keep a close watch on the $90 to $91 range. This area served as a sturdy support in mid-March and could warrant further examination if the stock dips to this zone.

Should this support level hold, we may see a rebound into the $96 range. If the stock climbs above this, the gap-fill level stands at $100.

However, if the stock breaks below $90, it exposes the downside gap near $87, followed by the 52-week low close to $84, and finally, the $79 to $80 range which includes a significant support level and the 2020 low.

If Disney’s shares descend to this level, long-term investors might see it as a ripe opportunity to accumulate positions.

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