Disney's Proxy Battle Ends. What's Next for the Stock?
Disney's Proxy Battle Ends. What's Next for the Stock?
By:Mike Butler
Disney now looks moves ahead with a focus on growth
- With the Disney proxy battle behind it, the company moves ahead with a focus on growth
- Disney has had a significant stock price rally from the beginning of the year, but has come off highs recently
- Disney will report earnings in early May
Disney (DIS) has had a great start to 2024, with over a 30% rally in DIS stock from the 2024 opening print to today.
Nelson Peltz and former CFO Jay Rasulo were seeking board seats, creating turbulence in Disney news, but shareholders recently rejected the idea based on early election returns.
CEO Bob Iger had positive things to say in the latest Disney press release.
“I just want to take a moment to thank our shareholders for your trust and confidence in the Disney Board and management and the ambitious strategy we are implementing across our businesses to build for the future,” Iger told shareholders. “Now that this distracting proxy contest is behind us, we’re eager to focus 100% of our attention on our most important priorities: growth and value creation for our shareholders and creative excellence for our consumers.”
The growth strategy
Iger highlighted a few key focal points for growth moving forward, but a few stand out to me when it comes to potential impact on the stock price.
The first is sustained profitability in streaming. With a mega-brand in Star Wars, and a seemingly unlimited amount of spinoff series available, it should come to no surprise that the streaming service would have a baseline audience. But beyond that, it feels that there is something missing to ignite the spark that would create a broader demand for the service.
Finally, we have ESPN and the potential impact it could have on Disney overall. Sports have always captivated people all around the world, but ESPN stands out as a primary focus for many fans. With the surge in sports betting with companies like DraftKings (DKNG), fans and viewers have even more of a reason to tune in and feel like they have skin in the game.
I believe this is Disney's best shot at explosive growth moving forward. Make a sweeping innovative change that's embraced by sports fans around the globe, and you've got something tangible that could change the way we view sports forever—both digitally and in person.
Disney stock expectations for 2024
With all that said, we can always find solace in the fact that markets will move as they may, and we can look to the options world to put context around expected stock price moves in Disney.
Based on current implied volatility (IV), we can see there is an IV spike in the May 10 options cycle relative to the cycles before it. This tells us that the market is pricing in a binary event, which will more than likely be the next quarterly earnings call for Disney. That cycle boasts a +-$8.74 expected stock price move, which is about 7.5% of the current stock price.
Looking further through the year, we can see that the Jan. 2025 options cycle has an expected stock price move of +-$20.51. This means that this upcoming earnings announcement has about a 40% weight of the overall expected move through this year and more. Many investors and traders are expecting some real stock price movement during the next earnings call, and we'll be here for it to discuss earnings strategy!
Join us around that time on Options Trading Concepts Live for a look at different bullish and bearish strategies ahead of the quarterly earnings announcement.
Mike Butler, tastylive director of market intelligence, has been in the markets and trading for a decade. He appears on Options Trading Concepts Live, airing Monday-Friday. @tradermikeyb
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