Aug 10, 2023

Disney will release its third-quarter earnings report after signing a sports betting deal for ESPN.


DIS – Weekly Chart

If DIS stock posts a negative result, it could trade lower to around $84. However, if the company surprises to the upside, the stock could initially trade higher to around $100.

ESPN, a division of Disney, has agreed to a $2 billion deal with Penn Entertainment to launch ESPN Bet, a branded sportsbook in the United States. The move marks the network’s first foray into sports betting, with the goal of challenging DraftKings’ success.

The most recent earnings report comes after questions about ESPN’s direct-to-consumer initiatives and the future of Disney’s TV assets. Last month, Iger stated that he would conduct a comprehensive assessment of the entertainment behemoth’s traditional TV assets as it continues to focus on streaming.

Disney’s stock has fallen by 20% in the last six months as Bob Iger, who returned as CEO in November, tries to revamp the company’s strategy.

Disney+ is expected to lose 3.6 million subscribers in Q3, following a loss of 4 million in Q2. The company is continuing efforts to cut costs by $5.5 billion this year, but a decline in subscribers is a major obstacle.

The parks segment is expected to have an operating income of $2.39 billion, which is higher than the $2.19 billion in Q3 2022. However, analysts are cautious about this prediction as demand may have slowed and there is a risk of margin erosion due to inflation.

Disney’s competitors are expected to see a 6% year-over-year decline in network revenue, which is likely to have a negative impact on Disney’s advertising revenues as well. While the outlook is somewhat bleak, there is the possibility of upside if results are better than expected. However, a drop below $80 would be a problem for the stock and could lead to even greater losses.

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