Disney (DIS) Stock Earnings Preview: Can it Beat Expectations?
May 9, 2023
When does Disney report earnings?
Disney (DIS) reports earnings on May 10th after the market closes at 3:05pm CST.
The multi-faceted company seeks to rebound after a stall in Disney+ subscribers, likely due to growing competition in the streaming space from big-name tech stocks like $NFLX, $AAPL, and $AMZN.
Disney is expected to report an earnings-per-share (EPS) of $0.94 on $21.8 billion in revenue.
Even with the Disney+ streaming performance worries, the stock has climbed steadily from the 2023 opening print of $88.98 to just shy of $103 as of May 8th. The 2023 high of $118.18 was reaching on February 9th, and quickly collapsed the same day:
Looking at the implied volatility of the options market in Disney, we can see the weekly expected move for the rest of the week is +-$5.63 - about 5% of the stock’s notional value. This is not too high of an expected move for an equity, but it is about 77% of the expected move through the June options cycle 39 days away from expiration, and over 50% of the expected move in the July options expiration cycle.
Based on this information, the market is placing a lot of weight on Wednesday's earnings report, given the high implied volatility in the weekly cycle relative to further-dated cycles.
With DIS stock trading at $102.98, we can go to equidistant out-of-the-money (OTM) strikes to see if there is a difference in premium, or skewed premium.
In this case, the 108 call is trading for a bit more than the 98 put, both 5 points OTM from the current stock price – this tells us that Disney’s options market has call skew in the weekly cycle. This indicates that a high velocity move is being priced into the upside – this does not mean the stock is going to go up, but the market is pricing in the risk of a high velocity move to the upside just slightly.
Tune in to see how DIS stock fares at 3:05pm CST on May 10th when the earnings report is released - Join Mike on Options Trading Concept Live every trading day from 11a-12p CST for a look at earnings trades, options strategy & concept discussions and more!
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