How to Trade Disney's 80% Surge Amid Streaming Boom
Disney was founded in 1923 and has since become one of the largest media and entertainment companies in the world.
The company has also come a long way since the days of Mickey Mouse with divisions including Walt Disney Pictures, Pixar, Marvel Studios, Lucasfilm, 20th Century Studios, Disney Parks, ESPN and now Disney+.
Even after the recent 30% drop in the Disney stock chart, analysts are turning increasingly bullish on the Disney stock forecast for the long term. Learn more about the Disney stock forecast, including how to trade it below.
|Stock:||Walt Disney Company (The)|
|Symbol for Invest.MT5 Account:||DIS|
|Date of Idea:||8 December 2021|
|Time Line:||1 - 6 months|
|Position Size for Invest.MT5 Account:||Max 7%|
- The Invest.MT5 account allows you to buy real stocks and shares from 15 of the largest stock exchanges in the world.
All trading is high risk and you can lose more than you risk on a trade. Never invest more than you can afford to lose as some trades will lose and some trades will win. Start small to understand your own risk tolerance levels or practice on a demo account first to build your knowledge before investing.
Why Trade Disney Shares? - Disney Stock Forecast
While Disney’s stock price has recently declined by more than 30% due to a disappointing fourth-quarter earnings report, there are several reasons why analysts are still forecasting new record highs for the stock. Let’s take a look at a few of them!
Reason 1: An increase in content spend is likely to attract more subscribers to Disney+
Wall Street has a strong focus on the performance of the Disney+ streaming service. While relatively new, compared to the likes of Netflix, the service already has more than 118.1 million subscribers worldwide as of its fourth-quarter 2021 results.
However, the management team are focused on spending more on new content to build out the streaming service. While the increase in content spending worried some investors in the short term, it is a move designed to reach the long-term target of 260 million subscribers.
Reason 2: Stocks with high pricing power are attracting long-term investors
To hedge against the ongoing impact of the coronavirus, research from Goldman Sachs shows stocks with higher pricing power are outperforming those with lower margins. Disney could easily increase the cost of the streaming service in the future or increase ticket prices to their theme parks thereby instantly adding to their bottom line.
In the recent earnings report, the management team also noted that the launch of the Disney Wish cruise ship in June 2022 was already 90% booked. More importantly, the team noted the pricing power of customers buying new guest experiences and services like Genie+ (a paid add-on to bypass standby queues).
Reason 3: Recent woes in Disney parks could be coming to an end
In the fourth quarter of last year, the revenue for Disney’s parks, experiences and products division was $1.06 billion. For this year, it was up $4.34 billion. The pandemic resulted in the closure of many of its theme parks and experiences all around the world.
Even now, most themes parks and cruises are not fully opened and are operating at reduced capacity. This means, there is still significant growth yet to come when they fully reopen. While it may not be clear when this could happen in the short term, the long-term growth prospects are there.
Disney Stock Forecast - What are the Analysts Forecasting?
According to analysts polled by MarketBeat for a long-term Disney stock forecast, there are currently a higher amount of buy ratings on Disney’s stock price than there are sell ratings.
The number of buy ratings has also increased over the last three months after a brief dip. However, there is one analyst with a sell rating on the stock and more that have a hold rating on the stock than in the previous months.
Source: MarketBeat, 7 December 2021
An Example Trading Idea for Disney Stock
An example trading idea for Disney’s stock price could be as follows:
- Buy the stock on a break above $151.00.
- Target the record high at $201.00.
- Keep your risk small at a maximum of 7% of your total account.
- Time Line = 1 – 6 months
- If you buy 10 Disney shares:
- If target is reached = $500.00 profit ($201.00 - $151.00 *10 shares).
The highest price target from analysts polled by the Wall Street Journal is $263.00. It’s unlikely the share price will go up in a straight line and it may even go much further down before it rises. Therefore, be sure to exercise good risk management which is one of the most important aspects of trading successfully. You should always know how much you could potentially lose on a trade and the risks involved.
Another factor to consider is the commission as these can eat into your profits. With the Admirals Invest.MT5 account you can buy US stocks from $0.02 per share. This means buying 10 shares in Disney would result in a commission of $0.20 ($0.02 * 10 shares).
There is a low minimum transaction fee of $1. So, the example trading idea above would result in a commission of just $1 overall!
How to Buy Disney Shares in 4 Steps
With Admirals, you can buy shares in US companies like Disney with a low commission of just $0.02 per share and a low minimum commission of just $1.
- Open an account with Admirals to access the Trader’s Room.
- Click on Trade on one of your live or demo accounts to open the web platform.
- Search for Disney at the bottom of the Market Watch window and drag the symbol onto the chart.
- Use the one-click trading feature, or right-click and open a trading ticket to input your trade size, stop loss and take profit level.
Source: Admirals MetaTrader 5 Web. Past performance is not a reliable indicator of future results, or future performance.
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Do You See Disney Moving Differently?
Remember that all analytics and trading ideas are based on the personal view and experience of the author.
If you believe there is a higher chance Disney's share price will move lower, then you can also trade short from a CFD (Contracts for Difference) trading account which Admirals also provide.
This means you can trade long and short to potentially profit from rising and falling stock prices. Learn more about CFDs in this How to Trade CFDs article.
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