IBD Stock Analysis
- Disney stock bounced off a test of its 21-day average.
- The relative strength line is also trending upward.
- Shares remain in buy range from a 183.50 entry.
Industry Group Ranking
* Not real-time data. All data shown was captured at
1:14PM EST on
Disney stock is the IBD Stock Of The Day, as the media and entertainment conglomerate flashes a buy signal amid hopes that theme parks will fully reopen, while the Disney+ streaming service is poised for its next evolution.
Disney (DIS) has been reeling from park closures since the start of the pandemic in March 2020. In its fiscal first-quarter, parks revenue sank 53% to $3.59 billion, and the segment’s operating income saw a pandemic-related impact of $2.6 billion.
But improving infection and vaccination rates could loosen coronavirus restrictions further. Industry watchers expect theme parks to reopen in spring or summer. Recently, Disney said it’s planning a multi-day ticketed food event at its California Adventure park in Anaheim in mid-March.
Meanwhile, a jump in streaming subscribers helped deliver a surprise profit in Q1.
Now, the Star streaming brand is set to launch in Europe tomorrow, CEO Bob Chapek told investors in a conference call after the earnings announcement. It will become a new content brand in Disney+, joining Disney Studios, Star Wars, Pixar, Marvel and National Geographic.
Star will mark a significant advance in the company’s streaming strategy as it will feature edgier content for older viewer from properties like FX and 21st Century.
The move gives a further boost to the number of Disney+ subscribers, which hit 94.9 million as of Jan. 2, up 9% from 86.8 million on Dec. 2, and 258% from a year ago. Subscribers will deliver a bigger revenue boost in March, when the monthly fee rises by $1 to $7.99 in the U.S. and by 2 euros to 8.99 euros a month in Europe.
Shares closed up 4.4% at 191.76 on the stock market today, after setting a new high of 194.02 intraday. Earlier this month, Disney stock broke out from a flat base buy point of 183.50, according to MarketSmith chart analysis. Shares finished back within the buy zone, which tops out at 192.68.
Disney stock, which was added to Swing Trader and mentioned on IBD Live today, flashed a separate buy signal as it also bounced off its 21-day exponential moving average. In an exponential moving average, the most recent price action carries a higher weighting than a simple moving average.
The relative strength line is trending upward, meaning Disney stock is outperforming the overall S&P 500 index.
Streaming Service Takes Off
Disney’s streaming service has been the one bright spot for the media giant during the pandemic and a big focus of its growth.
At an Investor Day on Dec. 11, management said there are more than 100 titles in the works for Disney+. And Chapek says the company expects to have 230 million-260 million Disney+ subscribers by 2024. That’s up from its early estimate of 60 million-90 million for that time frame.
The Financial Times reported on Feb. 22 that the company is also ramping up local-language productions in Europe to broaden its appeal. Jan Koeppen, president of Disney in Europe, said 50 original shows are expected by 2024.
The commissions range from an Italian mafia drama to a Dutch football documentary, the report said. Other potential projects include “Sam,” a drama about Germany’s first black police officer, and “Oussekine,” a French mini-series about the death of a French-Algerian student protester in 1986.
Please follow Adelia Cellini Linecker on Twitter @IBD_Adelia.