Disney Stock Faces Bearish Momentum Amid Market Volatility and Potential for Further Declines

Technical Analysis

As of August 13, 2024, The Walt Disney Company's (DIS) stock closed at $85.60, down 0.41% from the previous trading day. The stock is experiencing bearish momentum, as indicated by its Relative Strength Index (RSI14) of 38, which suggests it is nearing oversold territory. Additionally, both the 50-day moving average (96.69) and the 200-day moving average (100.46) are situated well above the current price, highlighting a prevailing downtrend. The MACD figure of -3.22 reinforces a negative sentiment, with no immediate support levels established and a resistance level identified at $85.96.

With a trading volume of approximately 12.61 million, surpassing the average volume of 10.98 million, investor interest remains strong, albeit amidst volatile market conditions. The absence of significant support indicates potential vulnerability for the stock to test lower boundaries, particularly the recent year low of $78.73.

Fundamental Analysis

Disney's market capitalization stands at $156.05 billion, with a price-to-earnings (PE) ratio of 32.80, suggesting the stock is relatively expensive compared to its earnings. The trailing earnings per share (EPS) of $2.61 highlights a pressing need for profitability restoration in light of the company's recent performance. The discounted cash flow (DCF) analysis yields an intrinsic value of approximately $19.11, signaling substantial upside potential against the market price.

Earnings announcements are scheduled for November 13, 2024, which will be crucial for assessing future growth prospects. Current analyst sentiment is moderately bullish, with a consensus rating of "Buy" reflected in the accumulation of positive outlooks from 23 analysts and two ratings of "Hold."

Recent news coverage discusses various factors affecting Disney, including a potential media merger with Reliance in India which, if successfully executed, may offer strategic benefits. However, the stock has been under pressure, evident in its decline following the D23 Expo and the broader market volatility, indicated by recent analyzes highlighting Disney as a stock positioned for a turnaround.

Predictions for Next Trading Day and Upcoming Week

Looking ahead to August 14, 2024, technical indicators suggest a likely continuation of bearish momentum. The absence of robust support means that the stock might test near-term lows, with investors likely cautious in the wake of recent volatility. For the coming week, if the stock fails to maintain above the $85 support level, it could face further declines into the lower $80 range, particularly near the year low.

Intrinsic Value and Long-Term Investment Potential

Disney's intrinsic value, assessed via DCF, significantly diverges from the current trading price, indicating long-term potential for capital appreciation as operational performance improves. However, the company's challenges in returning to pre-pandemic profitability remain critical. Long-term investment viability will largely depend on effective execution of growth strategies, particularly in its streaming and theme park segments. The sluggish share price and lack of support, combined with high PE ratios and recent volatility, indicate that while the stock may have future potential, it carries significant risk at this moment. As such, DIS is categorized as a 'Hold' candidate, where investors may seek to observe upcoming earnings reports and market dynamics before making further decisions.