Walt Disney Price Forecast August 2021 – Time to Buy DIS?

Shares of mass media and entertainment conglomerate The Walt Disney Company (NYSE: DIS) have increased by more than 5% on Thursday after the company surpassed all Wall Street expectations. Compared to last year’s figures of a loss of $4.7 billion, the company posted a quarterly profit of $923 million or 50 cents per share.

Walt Disney – Technical Analysis

According to Walt Disney’s financial statement, the company’s market cap is at $325.758 billion with total assets worth $200.25 billion. The company’s revenue for 2020 was $65.13 billion with a profit margin of -4.40%. This is a slight decrease from the $69.42 billion revenue in 2019. DIS shares closed on August  (19:59 UTC-4) at $179.29 with an uptrend of 0.67%.

If we take a look at the oscillators for Walt Disney, such as Relative Strength Index (14)(55.56),  Stochastic %K (14, 3, 3)(68.86), Commodity Channel Index (20)(106.04) and Average Directional Index (14)(9.97) are pointing towards a neutral action. Moving averages such as Simple Moving Average (30)(177.38), Exponential Moving Average (50)(177.46), Simple Moving Average (50)(176.78) and Exponential Moving Average (100)(177.17) are pointing towards a buy action.

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Recent Developments

Disney’s management team made some good decisions at a time when almost all aspects of its businesses were affected by the pandemic. By suspending the dividend and raising new capital, it paved the way for shoring up the company’s balance sheet and accelerating its Disney+ streaming television service. But certain risks remain as the management is still finding a way to help the shares outperform the S&P 500 Index in the next decade, in a similar fashion they did in the previous decade.

The recent spat between the company and Black Widow star Scarlet Johansson is worth mentioning. Disney got sued by the award-winning actress for releasing the highly anticipated Black Widow movie for purchase on Disney + simultaneously as they were released in theatres. Shares of Disney dropped for 5 straight days after the lawsuit was made public, decreasing by almost 4% in value. This is a much bigger amount than what the actress reportedly didn’t receive in compensation for her work.

This has changed investor perception of Disney’s streaming service. What was once thought of as a shining star that guided the business through the pandemic was now been seen as a very risky affair. But there’s good news as well, as the company’s direct-to-consumer portion has increased by 65% year over year in the first 6 months of 2021, which has largely been driven by Disney+.

Should You Buy DIS Shares?

Before considering DIS shares, investors should consider how Disney+ has performed since its inception. It currently has more than 103.6 million subscribers within 18 months of its debut. But investors were disappointed once this growth rate started slowing down as evident from the result of the most recent quarter. Even if the company wins the lawsuit on legal grounds, it has already generated negative publicity for movie fans, which could force the company to modify its movie distribution strategy.

Ever since Disney + has been launched, it has received quite a lot of media publicity for its streaming strategy and its potential to boost future profits. However, the overall company still relies significantly on its theme part operations. Revenue from this segment accounted for 38% of the total for the fiscal year before the pandemic. However, that share of overall revenue for the sector has decreased to 21% as parks are slowly reopening after the pandemic. Disney’s cruise business is yet another area that has been affected by the pandemic. Considering all of the other factors, investors would be smart not to buy DIS shares at the moment.

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