Disney Stock Dips After Announcing Park Layoffs

The equity is down over 13% this year

Digital Content Manager
Sep 30, 2020 at 10:49 AM
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The shares of Walt Disney Co (NYSE: DIS) are down 0.6% at $124.70 this morning, after the media and entertainment company announced it is laying off roughly 28,000 employees, mostly at its U.S. theme parks and in California, where Disneyland remains closed due to coronavirus restrictions. Earlier this year, the company shut down theme parks across the world to curb the spread of COVID-19, though just last week Disney urged California officials to reopen their facilities. 

The security has taken a 5% cut in September. Nevertheless, this month's selloff has found a floor at the shares' 100-day moving average. Year-to-date, DIS is down 13.6%, and remains a ways off its Nov. 26 all-time high of $153.41.

Despite these technical difficulties, analysts are still mostly optimistic towards Disney stock, with 11 of the 19 in coverage sporting a "buy" or better rating, and the remaining eight carrying a tepid "hold" or worse. Meanwhile, the 12-month consensus target price of $134.91 is a comfortable 7.9% premium to current levels. 

Investors looking to get in on Disney stock's next move may want to consider options. The security's Schaeffer's Volatility Index (SVI) of 30% sits in the low 11th percentile of its annual range. In other words, option traders are pricing in relatively low volatility expectations at the moment. What's more, the equity's Schaeffer's Volatility Scorecard (SVS) ranks at 82 out of a possible 100, implying that DIS has tended to exceed volatility expectations in the past year -- a boon for option buyers. 

 

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