What’s Behind The Drop In Disney’s Stock Last Week?

by Trefis Team
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Walt Disney stock (NYSE: DIS) was down more than 4% on 21st September 2021, while the stock is down more than 2% in the last one week. Disney stock, which trades at $176 per share currently, saw a decline over the last few days after the company’s CEO (Bob Chapek) gave a disappointing forecast for growth in its Disney+ division. After surpassing expectations by netting 12.4 million new customers in Q3 2021 (ending June 2021), as per Mr. Chapek, the company has hit some headwinds in the fourth quarter. Paid subscribers of Disney+ are expected to rise only in low single-digit millions. Adding to investors’ disappointment, the CEO also said that Disney has no plans to immediately reinstate dividend or share buy backs, citing lack of more normalized operating environment as well as cash flow and debt constraints.  But will Disney’s stock continue its downward trajectory over the coming weeks, or is a recovery in the stock more likely?

According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price data for the last ten years, returns for DIS stock are likely to be more than 2% in the next one-month (21 trading days) period after experiencing a 2% drop over the previous one-week (five trading days) period. Also, there is a 62% chance of the stock giving positive returns over the next one month. But how would these numbers change if you are interested in holding DIS stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test Disney stock price forecast after a rise or fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day! For additional details about Disney historical returns and return comparison to peers, see Disney (DIS) Stock Return.

MACHINE LEARNING ENGINE – try it yourself:

IF DIS stock moved by -5% over five trading days, THEN over the next 21 trading days, DIS stock moves an average of 2.7%, with a 65% probability of a positive return.

Some Fun Scenarios, FAQs & Making Sense of DIS Stock Movements:

Question 1: Is the price forecast for Walt Disney stock higher after a drop?

Answer:

Consider two situations,

Case 1: Walt Disney stock drops by -5% or more in a week

Case 2: Walt Disney stock rises by 5% or more in a week

Is the price forecast for Walt Disney stock higher over the subsequent month after Case 1 or Case 2?

DIS stock fares better after Case 1, with an expected return of 2.6% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an expected return of 2.5% for Case 2. This implies a price forecast of $181 in Case 1 and a figure of $180 in Case 2 using DIS market price of $176.000 on 9/26/2021.

In comparison, the S&P 500 has an expected return of 3.1% over the next 21 trading days under Case 1, and an expected return of just 0.5% for Case 2 as detailed in our dashboard that details the expected return for the S&P 500 after a rise or drop.

Try the Trefis machine learning engine above to see for yourself how the forecast for Walt Disney stock is likely to changes after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer:

If you buy and hold Walt Disney stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For DIS stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

Question 3: What about the stock price forecast after a rise if you wait for a while?

Answer:

The expected return after a rise is understandably lower than after a drop as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.

DIS’s returns over the next N days after a 5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for Walt Disney stock by changing the inputs in the charts above.

 

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