An update on Disney…
Disney seems to be in a vulnerable position right now on the heels of Barclays downgrade, reeling against the rope at the 170 level once again which has been a big support for the last several months. Technically, when you revisit a strong support level few times, then either you bounce hard and move up or you breakdown and then this becomes a very difficult level to climb over (resistance). Netflix is reporting tomorrow so there numbers will definitely impact Disney shares. Currently everyone is in love with them right now but if they miss, then Disney will drop too and give up the 170 level for sure. If that happens, then the next major level would be 150 (unfortunately) as Sellers will come in herds, more so since Disney has been grappling with valuation concerns for quite some time. But one thing that keeps me guessing is what happens to all those HotStar subscribers that are expected to flow in to Disney bundle starting Jan 1, 2022? Wonder if Barclays is overlooking that and underestimating Disney magic remains to be seen.
We believe that Disney is a Reopening story and long term should fare well. We are long and staying long (our average price is 118) but will load the truck if it happens to kiss 150. Till then hope the Mouse says “Cheese”!