Disney shares: more pain to come as profits drop?

While Disney has rebounded from its March lows, the outlook for the business is still tough.

Disney shares set for further declines?

Disney stock has rallied since the March low, but now looks at risk of a further decline. For a while, the fundamental news has begun to look better. For example, the company has managed to secure a $5 billion credit facility, providing it with much-needed cash that will help to shore it up in these more difficult times.

In addition, the previous chief executive officer (CEO) Bob Iger has taken a more direct role in leading the company through the current crisis. His departure earlier in the year sent shockwaves through Disney’s stock, but his return has been welcomed by investors.

However, whoever is in charge, the outlook for the group still looks tough. Parks and experiences provide the bulk of its profits, and with these closed for the foreseeable future a significant chunk of income has just disappeared. While the entertainment division, which produces films, has a slightly brighter outlook, it too is likely to see revenues fall sharply.

Disney+ division brings some respite

At least the Disney+ element is seeing growth. With so many consumers stuck at home, subscriber numbers have increased rapidly, passing 50 million subscribers by early April. Despite this, the division is not expected to be profitable for over three years, and while this might be brought forward as subscriber numbers rise, it will only provide a small bounce for income.

From a technical perspective, Disney has enjoyed a strong rally from the lows, surging from $80 to around $110. However, gains above $105 have been hard to sustain, with a possible break lower coming if the price drops below $102. Should this occur, then a decline to $90 or even towards the March lows at $80 cannot be ruled out.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.


Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.