2 Trendlines to Watch Ahead of Walt Disney Earnings

DIS has a history of meager post-earnings moves

Managing Editor
Aug 11, 2021 at 12:20 PM
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We might be on the back nine of this earnings season, but there's still plenty of corporate reports that could trigger broad market reactions. Perhaps most notable is entertainment mogul Walt Disney Co. (NYSE:DIS), which is slated to report fiscal third-quarter earnings after the close tomorrow, Aug. 12. Given the company's prolific role in the "streaming wars," Disney+ numbers could shed some light on post-pandemic trends, while also underscoring the impact of the delta variant on reopening measures.

Walt Disney stock has a rather muted history of post-earnings moves. In the last eight quarters, five have been to the downside, including a 4.9% drop in August 2019. Overall, DIS averages a post-earnings move of 3.3%, regardless of direction, the last two years. This time around, the options market is pricing in a slightly larger-than-usual move of 5.1%. 

On the charts, Walt Disney stock is battling with its year-to-date breakeven level. The shares' 200-day moving average has stepped up as recent support, a trendline that hasn't been breached on a closing basis since October 2020. Longer term, DIS is up 36% year-over-year.

DIS Stock Chart

You won't find much sideline money surrounding the blue-chip stock. The majority of analysts rate DIS a "buy" or better, with zero "sells" on the books. And among short sellers, a slim 12% of the stock's total available float is sold short.

But if you're an investor looking to hedge DIS' post-earnings reaction or keep an eye on the aforementioned trendlines, options may present an affordable route. Walt Disney's 30-day at-the-money (ATM) implied volatility (IV) of 26.6% ranks in the 19th annual percentile, meaning short-term options premiums are pricing in relatively low expectations at the moment.

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