Shares of Disney are down another 1.5% today and are now perilously close to the COVID intraday low of $79.07, set on March 17, 2020 when Disney theme parks were shut down and and the world was in full panic about a devastating pandemic and economic collapse.
Pre-pandemic it was trading at $153 and seemingly had a bright future on a full slate of superhero movies, live-action reboots and the launch of Disney+.
It quickly regained its pre-COVID levels six-months after the drop then continued above $200 in the market boom during the pandemic. Since then, a troubling picture has emerged. The cinema industry has struggled go get audiences to return after upgrades to large-screen televisions at home. Disney+ has run into formidable competition from Netflix and a thin library.
Perhaps most-troubling is that superhero movies are quickly falling out of vogue as they've grown expensive and repetitive, with the best IP worn out. In addition, Disney may have fumbled with its Star Wars franchise, which a few years ago looked like something that would spawn winners for decades. The live-action reboots of classics have been hollow and preachy, alienating part of its audience.
In its sports division, ESPN is struggling to maintain viewership in a fragmented market and it's embroiled in tough negotiations with cable carriers as it looks to deliver the service a la carte.
It's all led to souring on a quintessential American company.
On valuation metrics, it's always held a premium but it's fading. It's expected to earn 4.96 next year, which is about 16x earnings but 21x this years earnings. So it's certainly not a value stock yet and that isn't going to provide support.
Further out, the consensus 2026 estimate is $7.07, which is 11x but there are growing questions about execution. That's why it's in such a precarious place technically, bumping up against major support.
If DIS stock breaks $79.07 -- particularly on a closing basis -- then there isn't much support until the 2013 low of $60.41. At the moment, sentiment is broadly negative on the shares and that could be an opportunity but there needs to be some kind of fundamental catalyst and earnings are coming until November 8, 2023.
Here is a live chart of DIS stock.