Disney Q3 earnings preview: where next for Disney shares?

Disney+ continues to attract subscribers and the rest of the business is expected to continue recovering from the pandemic. We explain what to watch out for when earnings are released this week and consider how the Disney share price could react.

Charts (4)

When will Disney release Q3 earnings?

Disney will release third quarter earnings after US markets close on Thursday August 12.

Disney Q3 earnings preview: what to expect from the results

Disney+ continues to go from strength-to-strength by attracting new users, but the rest of Disney’s vast business is still in recovery mode after being hampered by restrictions imposed because of the pandemic. Revenue declined from its parks, resorts and cruises division, its studio business that produces its array of film and TV content, and from its linear TV networks in the first half of the financial year, while its streaming business delivered 65% growth.

Theme parks are now reopen, studios are back in production and its TV networks are benefiting from the return of live sports. However, Disney warned in May that filming was still being disrupted by restrictions and causing delays, while sport was still being hit due to localised outbreaks of the virus, such as the suspension of the Indian Premier League in early May.

Investors will be hoping that conditions improved for both divisions in the third quarter. However, the biggest surprise could come from the parks and resorts division, which analysts expect to return to profit for the first time since the pandemic began. Plus, the fact its cruise ships only recently set sail again provides another catalyst for the division going forward.

Meanwhile, markets are anticipating Disney+ ended the quarter with around 112.3 million subscribers, up from 103.6 million on April 3. The addition of 8.7 million subscribers would match what was delivered in the second quarter but will still be far below the bumper 21 million additions it made in the first.

Analysts are expecting revenue of $16.76 billion and adjusted EPS of $0.55. That would compare favourably to the $11.77 billion in revenue and the loss per share of $2.61 booked the year before when results suffered due to the pandemic.

That would also represent a topline improvement from the $15.61 billion in revenue delivered in the first quarter as it started to stage a recovery, but a drop in adjusted EPS from $0.50. Profitability is expected to continue to be hit by the additional costs of having to adapt to restrictions and improve safety for staff and customers – with Disney having warned it could spend an extra $1 billion this year as a result.

Where next for the Disney share price?

Disney’s (DIS) stock has had a choppy, ultimately unproductive quarter, with prices oscillating around the $175 area without forming any durable trends. Traders of all persuasions will be hoping this quarter’s earnings report will be enough to wake “The Mouse” from its slumber, with technicians watching for a break above $186 to signal a bullish continuation toward the $200 area in time or a bearish breakdown through $168 to tilt the odds in favour of a deeper retracement to below $160.

How to trade Disney shares

You can trade Disney shares with Forex.com in just four steps:

  1. Open a Forex.com account, or log-in if you’re already a customer.
  2. Search for ‘Disney’ in our award-winning platform
  3. Choose your position and size, and your stop and limit levels
  4. Place the trade 

More from Equities

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.