Disney stock is trading at around $85.69 a share with key support sitting below at $85.22. Although, financials remain strong YoY.

Overview

The Walt Disney Company, also referred to as Disney, is an American multinational media and entertainment giant with its headquarters at the Walt Disney Studios complex in Burbank, California. The Disney Brothers Studio was the name under which brothers Walt and Roy O. Disney founded Disney on October 16, 1923. On the 2022 Fortune 500 list of the largest corporations in the United States by revenue, Disney is one of the biggest and most well-known firms in the world, coming in at number 53.

Financials

Looking at the financials of the company for the fiscal year 2022, revenue grew to $82.7bn from $67.4bn and gross profit grew to $28.3bn from $22.3bn, despite recession fears. Additionally, EBITDA saw an increase of $3.5bn YoY, and profit after tax and expenses came in at $3.1bn in 2022 versus $2bn in 2021. As a result, earnings per share were reported at $1.73 for the year, which was a huge improvement for the company if you compare the previous two financial years. In 2020 the EPS came in at a negative figure and in 2021 it came in at $0.63 less than in 2022, this highlights the gradual financial improvements since the pandemic. Looking at the balance sheet, the value of its total assets has remained the same, however, Disney has managed to reduce its total liabilities by $6bn from the prior year. Due to this, the total equity of the company continued to grow by $5.8bn YoY.

Technicals

From a technical outlook, Disney shares are currently trading at around $85.69 a share. Looking at the chart on a daily timeframe, a descending triangle is forming with key support at $85.22, which corresponds with the lower green trendline of the triangle. A break below this support level could see the price of the stock slide towards the low $80s. On the other hand, towards the upside, resistance sits at $90.55 then at $91.05 then at $93.10. A break above these levels may see Disney’s price head towards the $95 price level. Looking at the technical indicators, MACD is currently negative and so is RSI as it reads 34.

Summary

Overall, the financials of the company are really strong. The revenue and profit continue to grow year-on-year and have improved significantly since the Covid pandemic, which is beneficial. The ratio of assets to liabilities is healthy and the cash-on-hand pile remains on the higher end of the spectrum, highlighting the business’ high reputation level. Despite of the recession fears, Disney should continue in this direction with minor financial losses on the way, as it stands. Based on the technicals, the stock is currently in a bearish trend and there is more potential for further downside. However, if the size and popularity of the company are taken into consideration within market terms, the price of the stock is actually quite cheap. Therefore, this could be a good buy opportunity for a longer-term profit. Investors must be wary though, as short-term bias suggests more downside.