Disney Earnings: How to Trade the Q2 Figures
Disney (DIS) is scheduled to report earnings on Tuesday, May 7, before the market opens.
DIS is up about 25% for the year to date, highlighting a positive start to the year against the S&P 500’s 6.5% gain. Disney surged over 10% following its last earnings report.
Will the good times continue after Disney reports its fiscal second-quarter earnings?
Investors expect to see Disney report earnings per share (EPS) of $1.11 and revenue of $22 billion. That would be up from the year-ago quarter, when DIS reported $1.03 EPS and revenue of $21.8 billion. However, it would be down from last quarter's EPS of $1.22 and revenue of $23.6 billion.
Now, with the proxy battle behind Disney, investors can turn their focus back on the fundamentals of the business.
Streaming subscriptions are in focus this quarter ahead of an announced crackdown on passwords like the one that Netflix (NFLX) has recently implemented. CEO Bob Iger announced during a CNBC interview the timing of the password crackdown, saying that the measure will start in only a limited number of countries, with a full implementation by September.
Last quarter, Disney’s Hulu added 1.2 million subscribers. However, Disney+ core subscribers fell sequentially by 1.3 million. That came amid a price increase for the streaming service.
If Disney's password crackdown follows a successful rollout experienced by Netflix, it could end up being a net positive for the stock. Disney trimmed its streaming losses by almost $300 million last quarter, and if that trend continues, shareholders will likely reward the stock.
Analysts expect improved metrics from Disney’s theme parks business to continue following a solid Q1 when Disney’s Asia experiences segment turbocharged revenues. International experiences revenue grew 35% year-over-year and domestic revenue grew 4% over the same period.
With the base effects from the 50th anniversary celebration out of the way, domestic operating income from experiences should return to show better growth. Meanwhile, higher ticket prices and attendance growth should continue to buoy profits from parks.
Disney traded with an implied volatility rank (IVR) of 82.6 as of Friday, May 3. That volatility comes after a pullback from highs traded in April and broader volatility in the U.S. equity markets.
For those believing that Disney will repeat its previous earnings reaction, a bullish trade could be done through selling a put spread. That said, setting the short strike around recent support by selling the 110 put and buying the 109 put would give a max profit of 39 and max loss of 61, with a probability of profit of profit (POP) of 65% for the May 10 strike.
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.
Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.
tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on tastytrade.com/disclosures.
tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.
tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.
tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.
© copyright 2013 - 2024 tastylive, Inc. All Rights Reserved. Applicable portions of the Terms of Use on tastylive.com apply. Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastylive’s podcasts as necessary to view for personal use. tastylive was previously known as tastytrade, Inc. tastylive is a trademark/servicemark owned by tastylive, Inc.