Disney overtakes Netflix

11 august 2022 112
Volkov_Anton
Volkov_Anton

Listed among the best MarketCheese authors
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Walt Disney published its quarterly earnings yesterday after the close of the main trading session. Investors reacted very positively to the report - the stocks rose 6.8% on the post-market, finishing the day just above the 120 level. So what did market participants get so excited about?

 

Walt Disney beat forecasts on both revenue ($21.5 billion with expectations of $21 billion) and earnings per share ($1.09 with expectations of $0.98). Entertainment park revenues jumped 70% to $7.4 billion - the business segment most affected by the pandemic is now quickly compensating for its losses.

 

Separately, it stands to mention the results of streaming services. Disney+ subscriber base grew by 14.4 million people to 152.1 million for the quarter. These results look particularly strong in comparison to the streaming market leader - Netflix, which has recorded a decrease in the number of subscribers for two quarters consecutively. Or is it better to talk about Netflix as the former market leader?

 

Summing up the results of all the streaming services operated by Walt Disney (Disney+, ESPN+ and Hulu), their total customer base was 221.1 million subscribers at the end of the last quarter. Netflix finished the last reporting period with 220.7 million subscribers. Of course, it's not entirely accurate to compare the results of three streaming services to one at a time, but anyway, this is troubling news for Netflix - its competitors are getting ahead.

 

Disney is also overtaking Netflix in terms of introducing advertising to its services. Starting December 8, a basic $7.99-a-month subscription to Disney+ will assume viewing adverts. For those who don't want to see ads, there is a more expensive month subscription at $10.99 per month. It is important that the price of the base tariff does not change - customers are generally more loyal to adds of advertising than to subscription price increases.

 

The sharp rise on the report's release has allowed Walt Disney to renew its maximums since late April. The current growth momentum may take the price to the important level of 128-129: the gap of April 19-20, as well as the minimums of March and January of this year, are located here. After reaching the 128-129 zone a correction for eliminating the overbought RSI is probable.

 

 

The following trading strategy option can be suggested:

 

Buy Walt Disney in the 119-121 range. Take profit – 128. Stop loss – 116.

 

Also, traders may use Trailing stop instead of a fixed Stop loss at their convenience.

Volkov_Anton
Volkov_Anton

Listed among the best MarketCheese authors
1st in the segment "Agricultural commodities"
2nd in the segments "Currencies" and "Oil and gas"
3rd in the segments "Indices" and "US stocks"
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