Wait for a better entry point to buy Disney stocks
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waltz disney (NYSE:SAY) does not have a magic year. DIS shares are down 22.39%. But more pain is yet to come. Part of the investors believe that the time has come to buy DIS shares. However, there are a few clues that the stock will drop further before landing on a bottom.
In response to the Walt Disney Company’s decision to denounce the state’s anti-LGBT bill, Republicans in Florida are pushing legislatively for a special tax district targeting Disney itself. The Florida House voted 68 to 38 to pass a bill that would have ended all special tax districts created before 1968.
Reedy Creek was established in 1967 and allowed The Walt Disney Company to expand its power in the state of Florida. He took on many responsibilities that would usually be assigned to a local government. The company provides utilities, emergency services and more for its Florida landholdings.
Reedy Creek allowed Disney to come in and establish itself as Florida’s largest private employer. This, in turn, led to Disney becoming one of the largest employers in the state.
Additionally, DIS investors will find the latest netflix (NASDAQ:NFLX) number of subscribers a shock to the system. Netflix has been a dominant force in the TV streaming industry for almost a decade. However, it reported a drop of 200,000 in the first quarter. Disney is investing billions in the streaming space. Thus, a slowdown in the industry indicator is not good news.
DIS stock is on hold (for now)
DIS stock was able to increase revenue and earnings per share by expanding into new markets such as theme parks, cruise lines and direct-to-consumer media services. The company also plans to focus more on digital media distribution in the coming years, as it believes it will be more profitable than traditional distribution methods in the long run.
Disney’s sources of revenue are diverse. They include movies (animated and live action), television programs, video games, publishing (books), consumer products like toys and clothing, theme parks like Disneyland Paris and Walt Disney World Resort Orlando, digital media like ESPN+, ABC Studios- owner of the Freeform network.
However, the latest developments will weigh on the DIS stock in the near term. So now is not the best time to invest in it.
The company is gearing up for several high-profile releases in the coming months. They are sure to generate lots of attention. With attractions such as “Star Wars: Galaxy’s Edge” and “Avengers Campus,” the number of international visitors to the company’s flagship resorts in Orlando and California will increase. In addition, new parks are opening around the world.
You can also expect another Avatar this year and sequels for Dr. Strange, Thor, and possibly another Black Panther movie as well. Therefore, the DIS action will ignore the negative momentum. But don’t expect all of this to happen overnight.
At the date of publication, Faizan Farooque did not hold (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.
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