Options Traders Blast Disney After Earnings

Wells Fargo also chimed in with a bear note

Assistant Editor
May 14, 2021 at 10:46 AM
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Walt Disney Co. (NYSE:DIS) stepped into the earnings confessional yesterday evening, reporting fiscal second-quarter earnings of 79 cents per share -- well above the 27 cents forecasted by analysts. Revenue, however, fell short of expectations, as did the blue-chip media giant's Disney+ subscriber growth. The streaming platform added 103.6 million subscribers, below the predicted 109 million. As a result, DIS was last seen 5% lower to trade at $169.50.

Yesterday, we took a look at Disney stock's technical setup in our pre-earnings write up, showing that the equity was at risk of falling below the once supportive 120-day moving average. Not only did it succumb to that trendline, DIS is now at risk of closing below the 150-day moving average for the first time since Aug. 4. This negative earnings report and the resulting bear gap are only adding to Disney stock's 6.1% 2021 deficit.

The lackluster earnings report has options traders speculating heavily from both sides of the tape. So far today, 120,000 calls and 81,000 puts have already crossed the tape, which is five times what is typically seen at this point. Most popular are the expiring weekly 5/14 170- and 167.50-strike puts, with new positions being opened at the latter.

Lastly, not much has changed on the analyst front, though Wells Fargo did dish out a bear note in the form of a price-target cut to $209 from $219. Coming into today, 15 of 19 brokerages considered the equity a "buy" or better, and the 12-month consensus price target of $209.08 is a hefty 23.6% premium to current prices.

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