Disney Share Price Forecast February 2022 – Time to Buy DIS?
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Shares of American multinational entertainment and media conglomerate Disney (NYSE: DIS) are in the green today, after closing at $149.53. Disney has encountered some troubles over the past 2 years. It invested a total of $71 billion to acquire Fox’s intellectual property as well as launch its streaming service. Disney’s business suffered another hit when it was forced to shut down its theme parks due to the pandemic. However, Disney shares are on the rise after a positive 2022 first-quarter earnings.
Disney – Technical Analysis
Disney’s financial statement indicates a market cap of $272.239 billion with total assets worth $203.311 billion. Revenue for 2021 was at 67.39 billion compared to $65.13 billion in 2020.
Moving averages such as Exponential Moving Average (20)(148.49), Simple Moving Average (20)(147.19), Exponential Moving Average (30)(148.52) and Simple Moving Average (30)( 146.05) are indicating a buy action. Oscillators such as Relative Strength Index (14)(51.81), Stochastic %K (14, 3, 3)(48.55), Commodity Channel Index (20)(36.28), Average Directional Index (14) (21.56) and Awesome Oscillator(1.21) are neutral.
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Recent Developments
Disney’s most recent earnings report for the first quarter of 2022 highlighted the rebound in the company’s theme parks. This segment, comprising of Disney Parks, Experiences, and Products achieved a revenue of $7.2 billion which is twice its revenue in the first quarter of 2021. Disney’s Operating income for Q1 2022 was $2.4 billion, compared to a loss the year before. However, Disney’s free cash flow for the quarter was a negative $1.19 billion. This is likely due to the company investing more to keep guests safe from COVID-19 at its theme parks, as well as investing in Disney+.
Net subscriber growth for Diney+ slowed to 2.1 million households during its fiscal 2021 fourth quarter. This called into question, Disney’s early streaming customer targets. As a result, the company reaccelerated the adoption of its flagship platform for the fiscal 2022 first quarter ended on Jan. 1. It also picked up 11.7 million paying customers since the previous quarter. Some of its other streaming services such as ESPN+ and Hulu also gained in net subscribers. This has put Disney’s initial calls for between 230 million and 260 million active streaming subscriptions by the end of 2024, back into consideration.
Should You Buy DIS Shares?
The good news for Disney investors is that the company’s direct to consumer revenue came in at $4.7 billion in the most recent quarter, which is an increase of up to 34% on a year-over-year basis. However, investors also have bad news to deal with. The company’s streaming operation lost $593 million in the same period.
As a result, Disney’s production has been suffering. The company had confirmed there were ten Marvel productions as well as ten Star Wars productions in the works. However, the majority of these have yet to begin production. Disney will need to increase subscriber growth as it has plans to spend $33 billion on entertainment content this year alone.
The company still presents some attractive opportunities for investors. Revenue from resorts, theme [parks, cable television and movies are on the rise. Indeed, the biggest share of the $33 billion allocated for content will go to Disney+ and sports programming. However, the company has several ways to monetize its products and generate a net return.
Disney is thus in a bit of a problem. It will either need to add more spending plans to impose price increases, both of which discourage subscriber growth. Considering this now isn’t the right time to buy Disney shares.
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