Disney Stock Hits New Low, What’s Next?

Disney (NYSE:DIS) is going through a rough patch. The COVID-19 pandemic took a toll on its theme park business. Further, its subscriber growth slowed in 2021 and weighed on its financials and, in turn, its stock price. 

Due to the challenges, Disney stock hit a new 52-week low of $126.82 and is down over 33% from its high. 

What Lies Ahead? 

Ongoing headwinds continue to impact Disney’s performance and its stock price. Further, the current macro and geopolitical environment remain a drag. Nevertheless, subscriber growth showed improvements during the last reported quarter. Moreover, the recovery in the parks business during the same period is encouraging.

For instance, Disney’s total subscriptions reached 196.4 million at the end of Q1. This included the 11.8 million Disney+ subscribers it added during the quarter. Further, its Parks, Experiences, and Products revenues doubled to $7.2 billion. 

Looking ahead, Disney expects its strong content slate to support global growth in its subscriber base. Further, new market launches will likely drive growth. Disney remains upbeat and expects Disney+ subscribers to reach 230–260 million by the end of FY24. 

Further, as the year progresses and operations normalize, Disney’s parks business is expected to benefit from solid demand. 

Highlighting the opportunities in its parks segment, Morgan Stanley analyst Benjamin Swinburne stated that Disney’s strategic initiatives will drive growth and margins higher. Further, the analyst sees a multi-year growth opportunity in the parks segment. Swinburne is Bullish about Disney’s prospects, and his price target of $170 represents 33% upside potential. 

Along with Swinburne, Goldman Sachs analyst Brett Feldman is also bullish about Disney’s parks business and expects further improvements in revenue and operating income. 

Bottom Line

The recovery in the parks business and reacceleration in subscriptions are encouraging. Further, a strong content slate, expected normalization in operations at parks, and investments to drive growth augur well for growth. 

However, increased competition in the streaming business remains a drag. Further, headwinds impacting consumer spending could play spoilsport. Due to the challenges, hedge funds have sold Disney stock. Per TipRanks’ Hedge Fund Trading Activity tool, hedge funds decreased their DIS holdings by 6.9M shares in the last quarter.

Nevertheless, most analysts are bullish about Disney stock. It has received 15 Buy and five Hold recommendations for a Strong Buy consensus rating. Moreover, the average Walt Disney price target of $188.72 implies 47.7% upside potential from current levels.

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