Walt Disney Stock News and Forecast: Why were DIS earnings so good?

Disney stock closed 3% higher on Wednesday before releasing earnings.
DIS earnings beat on top and bottom lines.
Disney shares spike in Thursday's premarket session.

Ivan Brian FXStreet

Walt Disney (DIS) reported earnings after the bell on Wednesday, and investors were not let down. The stock is currently trading at $158.65 in Thursday's premarket as the shares react strongly to a positive earnings release.

Disney Stock News

Earnings per share reached $1.06, well ahead of estimates for $0.61. Revenue hit $21.82 billion, also well ahead of estimates for $18.63 billion. User growth was impressive with Q1 streaming Disney+ users rising to 129.8 million. That is a gain of 37% from a year earlier. The most impressive gain was in ESPN+, which saw user growth of 76% on the year.

Disney also reaffirmed guidance for Disney+, with subscriptions on target to reach 230 to 260 million users by 2024. Disney+ will look at price increases in 2023, according to CEO Bob Chapek on the post-earnings conference call. This is likely to remain highly competitive in pricing for 2022 as Netflix and Amazon Prime have been increasing subscription costs.

Chapek also said the Parks segment had its second-best quarter ever. Attendance is exceeding pre-pandemic levels at many sites. Parks revenue was nearly $1 billion ahead of analyst forecasts. In a warning shot to AMC holders perhaps, the CEO said, "We do not subscribe to the belief that theatrical is the only way to build a Disney franchise."

In a nod to metaverse developments, the CEO said, “If the metaverse is the blending of the physical and the digital in one environment, who can do it better than Disney?” Fair point, I guess.

Disney Stock Forecast

The afterhours move has seen Disney shares add nearly 8% to Wednesday's close. The move has now retraced up to $157. This puts in a significant low and should mark the end of the downtrend for now. Medium to longer-term traders can use $130 as their downside pivot.

$160 is probably best for short-term players. Above here, the trend begins to look more bullish as it takes out the lower high from January. $170 is next up as resistance, as can be seen from the horizontal line in the daily chart below. That brings Disney into a high volume resistance area, which will slow things down, from $170 to $185.

Disney (DIS) chart, daily

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Author

Ivan Brian

FXStreet

Ivan Brian started his career with AIB Bank in corporate finance and then worked for seven years at Baxter. He started as a macro analyst before becoming Head of Research and then CFO.

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