Disney reports its third-quarter earnings on the heels of a sports betting deal for ESPN.
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DIS stock is trading near the year’s lows, and a negative result could push the stock lower through the $84 level. An upside surprise could initially set a low price with a target of $100.
Disney’s sports network ESPN has struck a $2 billion deal with Penn Entertainment to launch ESPN Bet, a branded sportsbook in the United States. The move will be the first effort by the network to enter sports betting and seeks to challenge the success of DraftKings.
The latest earnings come after questions about ESPN’s direct-to-consumer efforts and the future of Disney’s TV assets. Last month, Iger said he would take an “expansive” look at the entertainment giant’s traditional TV assets as it continues to focus on streaming.
Disney shares have dropped 20% over the past six months as Bob Iger, who came back as CEO in November, attempts to change the company’s strategy.
The company is continuing efforts to cut $5.5 billion in costs this year, but a decline in plus subscribers is a headwind. Disney+ is expected to see further subscriber declines, with analysts predicting a subscriber drop of 3.6 million in Q3 from the previous quarter after the platform lost 4 million users in Q2.
The parks segment is expected to show an operating income of $2.39 billion, above Q3 2022’s $2.19 billion. Analysts have remained cautious as demand may have slowed, while there is a margin risk due to inflation.
Advertising revenues are also expected to suffer, with a 6% drop in the network revenue of Disney’s competitors year-over-year. With a slightly gloomy outlook, there may be an upside opportunity with better results. A drop below $80 would be a problem for the stock and could lead to more significant losses.
