Disney potentially shaping up for a move higher. Its price closed above the resistance of $90.48 yesterday, which acted as support previously.

Technicals

Taking a look at Disney as it seems like it is shaping up for a potential move higher. In recent trading sessions, the price has been trading below the support level it broke through on the 20^th of June. Or respectively, $90.48 (white trendline). This price is now acting as resistance and yesterday it closed just above it at $90.53, which could be an indication of a possible bullish move. In an ideal world, we would expect something along the lines of what is highlighted by the green arrows, a W shape formation. With the resistance at $92.47 then the tough level at $94.52 (red oval). However, this of course is not guaranteed. Additionally, we can see that its stock price has also found a small base of support just above the green trendline, as well as along it. The support is located at $87.35 followed by the key one at $86.87 (green trendline). A dip below $86.87 could see the price slide lower towards $84.07, which was the low of 2022. Looking at the technical indicators, MACD has just turned positive and the RSI has now turned neutral as it reads 48.

Financials

Let’s also look at this from a different perspective. Not only is Disney a well-established mass media and entertainment conglomerate, but its financial numbers also speak a little for themselves. Currently, Disney’s stock price is at levels it was in 2016, suggesting that the company has not grown or shown signs of growth in 7 years. However, if we look at its income statement and balance sheet from 2016 and compare it with 2022 we can see that this is not the case. Revenue in 2022 was 49% higher than in 2016 with a gross profit of $28 billion. Profit after tax fell $6bn for the year, but this was largely as a result of 2 consecutive years of disruptions from Covid. World Health Organisation (WHO) has recently announced that Covid is no longer a worldwide matter, and realistically, day-to-day life is now almost at the levels it was pre-covid. Which in turn, is a huge positive for Disney’s parks, hotels and studios. Moreover, the company’s cash-on-hand pile has grown by 152% since 2016 and now stands at $11.6 billion. Its total assets have risen to $203 billion from $92 billion (+120%), raising the equity to $98 billion from $47 billion over the years. Therefore, it could be argued that its stock price is currently undervalued in today’s market expectations.