How To Trade Walt Disney Stock Before And After Q3 Earnings

Walt Disney Company DIS is set to print its third-quarter financial results after the market closes Wednesday. The stock was trading about 3.5% higher heading into the event.

When the entertainment-giant printed its second-quarter results on May 11, the stock gapped slightly the following day and hit a low of $99.47 before bouncing up to close almost flat.

For the second quarter, Disney reported EPS of $1.08 on revenue of $19.3 billion. The company beat the EPS estimate of $1.07 and revenues of $18.9 billion.

For the third quarter, analysts estimate Disney will print earnings per share of $1 on revenues of $20.49 billion. Traders and investors will be watching closely to see whether Disney has been able to continue growing Disney+ subscribers in the wake of Netflix, Inc NFLX reporting a subscriber loss for the same quarter.

On July 26, Truist Securities analyst Matthew Thornton maintained a Buy rating on Disney and lowered the price target from $135 to $125. The new price target suggests there’s between 13% and 22% upside for Disney.

From a technical analysis perspective, Disney’s stock looks set to trade higher over the coming days because the stock has settled into a strong uptrend pattern on the daily chart. It should be noted that holding stocks or options over an earnings print is akin to gambling because stocks can react bullishly to an earnings miss and bearishly to an earnings beat.

Want direct analysis? Find me in the BZ Pro lounge! Click here for a free trial.

The Disney Chart: Disney reversed into an uptrend on July 14 and has since made a consistent series of higher highs and higher lows. The most recent higher low was formed on Aug. 5 at $105.37 and the most recent confirmed higher high was printed at the $111.23 mark on Monday.

• On Wednesday, Disney spiked up above the most recent higher high, which confirms the uptrend is still intact. If the stock soars up higher in response to its earnings print, traders can watch for Disney to print a bearish reversal candlestick to indicate the stock has topped out and another higher low is on the horizon.
• If Disney suffers a bearish reaction to its earnings print, bullish traders will want to see the stock form a bullish reversal candlestick above the most recent higher low. Bullish traders can also watch for Disney to bounce up off the eight-day exponential moving average on a retracement, which has been acting as strong support since July 15.
• Disney has resistance above at $115.76 and $120.61 and support below at $108.50 and $100.90.

See Also: Disney Leads Media Earnings This Week As Reporting Season Moves Past The Peak

Photo via Shutterstock.