Disney Is Testing Yearly Lows, Here Is Why

Key Insights

  • Disney’s fiscal Q2 report missed analyst estimates, and the stock made an attempt to settle below the $100 level. 
  • Traders are worried that the company will not be able to show strong growth in the near term. 
  • The stock has already lost about half of its value from the highs that were reached back in 2021, which could attract speculative traders. 

Disney Stock Falls After Quarterly Report

Shares of Disney gained additional downside momentum and tested yearly lows after the company released its fiscal second quarter report.

Disney reported revenue of $19.24 billion and adjusted earnings of $1.08 per share, missing analyst estimates on both earnings and revenue.

The company noted that it added 7.9 million Disney+ subscribers in the quarter, but this growth failed to provide any support to the stock.

Meanwhile, Disney’s park segment continued to rebound. The revenue in this segment has more than doubled on a year-over-year basis.

Nevertheless, the market is worried about Disney’s ability to grow its revenue and earnings at a sufficient pace. These worries are caused by the general nervousness in the market amid rising interest rates and the potential slowdown of the economy.

What’s Next For Disney Stock?

Currently, Disney is expected to report earnings of $4.15 per share in the current year and $5.4 per share in the next year, so the stock is trading at 25 forward P/E.

S&P 500 remains under significant pressure, and traders are worried about the general health of the economy amid high inflation. In this environment, it is not clear whether the current Disney valuation is cheap enough to attract more investors.

At the same time, the stock has already lost roughly half of its value from the highs that were reached back in 2021. As the revenue of the park segment continues to grow while Disney+ subscriptions increase, analyst estimates may move higher, which could provide more support to Disney shares after the strong pullback.

For a look at all of today’s economic events, check out our economic calendar.

Walt Disney Near Two-Year Low Ahead of Report

Dow component Walt Disney Co. (DIS) reports Q2 2022 results next week, with analysts looking for a profit of $1.19 per-share on $20.04 billion in revenue. If met, earnings-per-share (EPS) will mark a 51% profit increase compared to the same quarter last year, when renewed Covid restrictions delayed reopening plans. The stock rallied to 157 after beating Q1 estimates in February but that buying spike marked the highest high in the last three months, ahead of a major decline that’s relinquished 25% of its value.

Politics vs. Profits

The Mouse has lost nearly 45% in two months since posting an all-time high above 200 in March, close to repeating 2020’s 49% somersault. Worse yet, the company is entangled in hot-button social justice issues, practically ensuring that half of its diverse customer base is angry with its actions. That’s no way to protect an American brand that’s defined wholesome family entertainment since “Steamboat Willie” was released in 1928.

Disney rallied in 2020 on the rapid growth of its streaming service but recent subscriber numbers have been mixed, for the same reason that Netflix Inc. (NFLX) recently warned about subscriber losses in the second quarter. Many who were stuck at home with kids in the first year of the pandemic subscribed to Disney+ to keep them engaged between Zoom school sessions. That phenomenon ’pulled forward’ future sales, generating a classic saturated market for streamers.

Wall Street and Technical Outlook

Wall Street has been asleep at the wheel during the Disney decline, generating an ‘Overweight’ consensus based upon 21 ‘Buy’, 2 ‘Overweight’, and 8 ‘Hold’ recommendations. Worse yet, price targets currently range between a low of $130 and a Street-high $229 but the stock will trade on Friday more than $20 below the low target. This huge disconnect highlights the failure of analysts to measure the financial impact of the Netflix warning and social justice controversy.

Walt Disney finally cleared 2015 resistance at 122 in December 2020, entering a brief uptrend that hit an all-time high at 203.02 in March 2021. The subsequent decline sliced through the 2019 high in January 2022, signaling a failed breakout that’s dropped the stock to levels first struck in April 2015. Disney pays no dividend so that horrific performance translates into a zero seven-year return, making it one of the Dow’s worst performers.  Accumulation has dropped to a 10-year low at the same time, further darkening the long-term outlook.

Catch up on the latest price action with our new ETF performance breakdown.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Netflix Is Down By 39%, Here Is Why

Key Insights

  • Netflix stock dives after the company reports that net subscribers decreased by 200,000 in Q1 2022. 
  • The company’s subscriber forecast for Q2 2022 shocks the market. 
  • Netflix’ growth story is busted, and the company needs to come up with positive catalysts to break the current downside trend. 

Netflix Stock Collapses As The Company Predicts A Loss Of 2 Million Subscribers In Q2 2022

Shares of Netflix found themselves under strong pressure after the company released its first-quarter report. Netflix reported revenue of $7.87 billion and earnings of $3.53 per share, beating analyst estimates on earnings and missing them on revenue.

The market focused on the company’s subscriber data as Netflix said that it lost 200,000 subscribers in Q1 2022. More, the company believes that net subscribers will decrease by as much as 2 million in the second quarter of 2022.

The market is clearly shocked by this news, and Netflix stock is down by 39% during the current trading session. Other stocks in this market segment, like Disney  and Paramount, are also moving lower.

What’s Next For Netflix Stock?

Netflix has been a classic growth stock for years, so investors were focused on the company’s subscriber numbers and potential revenue opportunities rather than the company’s valuation.

Currently, analysts expect that Netflix will report earnings of $10.96 per share in 2022 and earnings of $14.17 per share in 2023, so the stock is trading at 15 forward P/E.

Such valuation levels look cheap for one of the leading tech stocks, but earnings estimates have been moving lower in recent months and they will decline after the earnings report.

Recent market action shows that tech stocks get severely punished if the market has doubts about their ability to grow. Examples include Roku (from $490 to $98), Zoom (from $588 to $95), Peloton  (from $171 to $20).

In this light, it remains to be seen whether speculative traders will rush to buy Netflix shares after the huge pullback which took the stock from the $700 level to the $215 level.

Netflix promised to monetize shared passwords and explore a move into advertising, but the company will have to come up with tangible evidence of the success of such initiatives before the market is ready to view it as a growth stock again.

For a look at all of today’s economic events, check out our economic calendar.

Walt Disney at Monthly Support

Dow component Walt Disney Co. (DIS) has rallied over 9% on low volume since February, lifting into 50-day moving average resistance. The entertainment giant has struggled with this barrier since March 2021, highlighting a bear market impulse that’s now undercut the price level traded when the company rolled out Disney+ in November 2019. The stock is down more than 8% so far in 2022 and is still showing no signs of attracting new shareholders.

Where’s the Blockbuster?

COVID-19 lockdowns and restrictions shut down production studios, theme parks, cruise ships, and sporting events. Things are back to normal but Disney hasn’t produced a single blockbuster since Avengers: Endgame in 2019. Accusations of political woke-ness and lore destruction have plagued marketing efforts, encouraging a legion of former fans to pass on new offerings. The $1.9 billion earned by 20 Century Fox’s Spiderman: Homecoming has been a slap in the face in this regard, given the sub-par performance of Disney’s newest Marvel movies.

Disney+ added 11.8 million streaming subscriptions in the fourth quarter, higher than expectations, but the service isn’t expected to make money for another two years. In addition, accounting tricks padded the quarterly metrics, with bean counters adding two million Hulu Live subscribers to the domestic total.  Disney has also announced a new ad-supported subscription tier, raising fears the slimmed-down service will bastardize paying customers.

Wall Street and Technical Outlook

Wall Street consensus stands at an ‘Overweight’ rating based upon 20 ‘Buy’, 2 ‘Overweight’, and 8 ‘Hold’ recommendations. Price targets currently range from a low of $132 to a Street-high $229 while the stock is set to open Thursday’s session about $50 below the median $191 target. This dismal placement highlights a major disconnect with Main Street investors, who have been sitting on their hands for more than a year now.

Walt Disney mounted the 2019 peak at 153.41 in November 2020, entering a strong uptrend that hit an all-time high at 203.02 in March 2021. The subsequent decline completed a double top breakdown in November, also violating the 50-day and 200-day moving averages. January and February 2022 rally attempts failed to remount those resistance levels, consistent with a bear market impulse that’s now settled at the 50-month moving average near 138. Stochastics has now entered a monthly buy cycle but, so far at least, there’s been no sign of accumulation.

Catch up on the latest price action with our new ETF performance breakdown.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Healthcare Giant CVS Files for NFT and the Metaverse-Related Trademarks

Key Insights:

  • CVS files NFT and Metaverse-related trademark applications.
  • Drugstores could follow in the footsteps of Walmart and deliver virtual shopping.
  • The healthcare sector could also benefit from blockchain, NFTs, and the Metaverse.

Interest in NFTs and the Metaverse has surged in recent months. A range of industries has taken to NFTs and the Metaverse. These include art, fashion, film, music, and sport.

In some countries, one sector that has been slow on the uptake is the healthcare sector. In the early days of Bitcoin (BTC), blockchain and crypto, the crypto sector identified blockchain attributes that would benefit the healthcare sector.

The COVID-19 pandemic and administrative burdens likely delayed the sector’s exploration of the digital world. This week, U.S healthcare giant CVS Health may be looking to break the mold.

CVS Health Applies for NFT and Metaverse-Related Trademarks

This week, CVS reportedly submitted a trademark application to sell “downloadable virtual goods” in the Metaverse.

According to the report, U.S. drugstore chain CVS aims to sell prescription drugs and other drugstore products in a virtual drugstore. CVS would then authenticate the products and sales with the use of NFTs.

The move by CVS comes after Walmart filed trademark applications in a move towards virtual stores in the Metaverse.

Virtual Drugstores and Healthcare Decentralization the Future Healthcare

As the U.S looks to return to some semblance of normality in the wake of the COVID-19 pandemic, the healthcare sector will likely need to take a close look at the benefits of blockchain, cryptos, NFTs, and the Metaverse.

In 2020, we explored how blockchain would change lives, the global economy, and the world. At the time, immediate healthcare sector benefits included the removal of the paper trail, making patients’ medical records available on a decentralized ledger, which would provide data points to support the fight against virus and disease.

As the healthcare sector looks at lessons learned from the COVID-19 pandemic, dissemination of information and access to critical data points could have arm healthcare workers with the necessary facts to combat viruses.

In October 2021, Forbes published an article exploring how blockchain could revolutionize healthcare. The report looks at reduced costs and new ways for patients to access healthcare. Forbes discusses one healthcare company called “Patientory.” Patientory sees blockchain networks capable of delivering a combination of transparency and privacy. Blockchain technology could give the healthcare sector access to medical data while withholding sensitive patient information. “Up-to-date patient histories and data, pandemic tracking and reporting, secure communication with verified healthcare personnel” form part of Patientory’s solutions.

For the healthcare sector, general practitioners and medical specialists could ease the strain by going Metaverse. While physical examinations need to be in person, some elements of the work could go virtual, which would reduce hospital traffic.

CVS Follows in the Footsteps of Other Mainstream U.S Corporations

In recent months, other major U.S corporations submitting NFT and Metaverse-related trademark applications include:

When considering the demise of department stores and the sharp increase in online retailing, the Metaverse could be the next best thing for online shoppers. Virtual stores could use NFTs to authenticate online sales.

One risk for the healthcare sector is the marked increase in illicit activity. Appropriate controls would need to be in place to protect personal data and personal privacy.

Indie Movie Targets NFTs for Fund Raising

Key Insights:

  • Indie film director Miguel Faus turns to the NFT market to fund his debut film.
  • Independent filmmakers see NFTs and DAOs as a new avenue to fund films.
  • BlockbusterDAO, Quentin Tarantino, and platform FF3 have led the way.

NFT activity has been rampant since the start of the year. The surge has been industry agnostic, with music, film, fashion, and art taking a greater interest in digital assets and the Metaverse.

It hasn’t just been NFTs and the Metaverse that have seen activity spike. This year, DAOs have become another source of fund-raising.

Indie Movie Makers Find Ideal a Partner in NFTs

Historically, major film studios have called the shots in the movie industry. However, independent filmmaking has been on the rise in recent years, supported by streaming platforms such as Netflix Inc., Hulu, Disney+, and Prime Video. Streaming platforms have given independent film audiences access.

The latest Indie film to go NFT is reportedly ‘Calladita.’ Director Miguel Faus has turned to crypto to fund his debut feature film.

Crowdfunding for ‘Calladita’ commences on 2nd March. NFTs and other rewards are on offer to those who contribute. In addition, financiers of the movie are to receive NFTs that will include stills and videos.

One film character is an art gallery owner who has an NFT collection. Backers of the movie can have their NFTs displayed as part of the NFT collection shown in the film.

Web3 and the End of Film as We Know It

Since the start of the year, several events suggest a seismic shift in the film industry.

Quentin Tarantino went ahead with an auction of 7 NFTs that included never-seen-before footage from Pulp Fiction. Tarantino went ahead with the auction despite a Miramax lawsuit. The first of the seven “TarantinoNFT” sets, based on the Ethereum (ETH) blockchain, fetched $1.1m in January before Tarantino hit pause due to market volatility.

While Tarantino was not raising money for an indie film, news of a BlockbusterDAO drew plenty of interest in late December. The DAO is looking to revolutionize the film industry by turning Blockbuster Video into the “first-ever DeFilm (Decentralized) streaming platform and a mainstay of both Web3 brands and products”.

One other platform also looking to revolutionize the film industry is FF3. FF3 aims to give filmmakers a platform to finance movies with NFTs.

Aligned with Miguel Faus’s vision, investors would have ownership of collectible NFTs that owners could sell in the NFT marketplace. On FF3, investors would also have a share of film revenues.

For indie moves, cryptos, NFTs, and new platforms could deliver a new era for the broader film industry.

The highest-grossing independent film of all time was reported to be Mel Gibson’s 2004 “The Passion of the Christ,” which had worldwide ticket sales of $622.3m, at the time of release and a production budget of just $25m, fully funded by Mel Gibson himself.

ViacomCBS Sells Off After Mixed Quarter

ViacomCBS Inc. (VIAC) is trading lower by more than 11% in Tuesday’s pre-market after posting a Q4 2021 profit of $0.26 per-share, missing estimates by $0.19. Revenue beat expectations by more than $500 million, rising 16.4% year-over-year to $8.0 billion. Paramount+ and Showtime streaming services added 9.4 million subscribers, reaching a global total of 56 million. New subs beat 6.4 million estimates by a wide margin. The free Pluto service posted strong growth as well, adding 10 million new users.

Investments Overpower Revenue Growth

The cost to obtain subscribers rose, similar to headwinds faced by rivals Netflix Inc. (NFLX) and Walt Disney Co. (DIS), who are also chasing a dwindling pool of potential customers. The company failed to disclose bottom line results for its streaming business, leading analysts to conclude the divisions are still losing money. That isn’t good news because VIAC profits remain dependent on stagnating legacy media that includes Nickelodeon, MTV, and Comedy Central.

KeyBanc Capital Markets analyst Brandon Nispel upgraded the stock to ‘Sector Weight’ ahead of the report, simultaneously sounding the alarm about tough market conditions. As he notes “VIAC fundamentals going forward are poor and expectations are high for EBITDA/FCF, both of which are likely to decline in 2022 given ramping streaming investment. However, we worry that accelerating subscriber growth and breakdown of profitability between legacy Media and DTC could lead to improving sentiment and overenthusiasm could ensue à la 2021.”

Wall Street and Technical Outlook

Wall Street consensus stands at a modest ‘Hold’ rating, based upon 10 ‘Buy’, 1 ‘Overweight’, 13 ‘Hold’, 0 ‘Underweight’, and 3 ‘Sell’ recommendations. Price targets currently range from a low of $32 to a Street-high $67 while the stock is set to open Tuesday’s session on top of the low target. This dismal placement highlights investor dissatisfaction with ViacomCBS’s progress-to-date, fueled by the 69% decline since the stock topped out at 102 in March 2021.

ViacomCBS was created in December 2019 by the merger of Viacom and CBS, keeping the old CBS chart going forward. It rose more than 60 points into March 2021, and turned tail, crashing 60% in just four sessions. Aggressive sellers returned in October after six months of sideways action, breaking support in the upper 30s. A test at the 200-day moving average has failed twice, giving way to a selling spiral that could now break the 2021 lows in the upper 20s.

Catch up on the latest price action with our new ETF performance breakdown.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Coinbase Welcomes Former SEC Official Scott Bauguess

Regulation is very important when it comes to new investment assets, such as cryptocurrencies because it gives investors regulatory clarity. 

The U.S. Securities and Exchange Commission (SEC) ex-employee announced on his Twitter account that yesterday was his first day at Coinbase. He is now the new VP for Global Regulatory Policy in the cryptocurrency exchange, as you see below:

In his new position, he will work with the authorities in order to have a better regulatory environment for new investors that want to enter the crypto world.

Coinbase keeps investing in its global adoption, last Sunday, Coinbase paid $14 million on a commercial ad during the Super Bowl game. 

The ad was a QR bouncing for 1 minute that gets you to a Coinbase’s webpage. The commercial got so much attention that the ad got 20 million visits in just 1 minute and crashed the website, but moments later Coinbase announced that they were back online.

About Scott Bauguess

Scott Bauguess graduated in 1992 as an Electrical Engineer from the University of Illinois Urbana-Champaign. 

His previous experience before Coinbase was working 12 years in the SEC.

He was the Deputy Director of the Division of Economic and Risk Analysis for 6 years. Before that, he worked as an Assistant Director and as a Senior Financial Economist in the SEC.

In his earlier days, he worked six years as an electrical engineer at Motorola Solutions. Then he was a Doctoral Candidate at Arizona State University for five years. 

Besides his new position at Coinbase, he is a faculty member at the University of Texas’s McCombs Business School.

It’s Not the First Time That a Former SEC Employee Joins Coinbase

Last month, Thaya Knight, the former counsel to Commissioner Elad Roisman at the SEC, joined Coinbase to work as its senior public policy manager. Knight was also the counsel of the SEC Commissioner Hester Peirce between 2018 and 2019.

Earlier this month, Brian Rocha, a former Netflix, Warner Bros, and The Walt Disney Company employee joined Coinbase as the new Head of Content Strategy. 

In September 2021, Shalin Pei, a former Facebook employee, joined Coinbase as its Senior Product Design Manager.

Considering the huge attention of Coinbase’s Super Bowl commercial, there is no doubt Coinbase will keep growing.

Why Disney Stock Is Up By 5% Today

Disney Stock Rallies As Parks Rebound

Shares of Disney gained solid upside momentum after the company released its quarterly report. Disney reported revenue of $21.82 billion and adjusted earnings of $1.06 per share, beating analyst estimates on both earnings and revenue.

The company managed to exceed analyst estimates thanks to the strong performance of Disney’s Parks, Experiences and Products division. According to Disney, domestic parks are “generally operating without significant mandatory COVID-19-related restrictions”, while the international segment is still facing restrictions in some locations.

Disney+ subscriber growth also exceeded analyst expectations. The company managed to add 11.8 million subscribers to reach a total of 129.8 million.

What’s Next For Disney Stock?

Disney exceeded analyst expectations in the two key segments, which provided material support for its stock. The robust rebound of the domestic parks segment indicates that a similar rebound should be expected in the international segment when the pandemic-related restrictions are lifted.

Meanwhile, the continuation of growth for Disney+ serves as an additional bullish catalyst. The recent Netflix results raised worries about the future performance of all streaming services, but Disney+ managed to grow at a healthy pace.

Currently, analysts expect that Disney will report earnings of $3.77 per share in fiscal 2022 and $4.93 per share in fiscal 2023, so the stock is trading at 31 forward P/E for 2023. This is not cheap, but the market looks ready to focus on future profits. In addition, analyst estimates will likely move higher in the upcoming weeks, providing additional support to Disney stock.

It remains to be seen whether the recent inflation data will put any material pressure on Disney stock as the company should have the ability to increase prices if necessary due to the strong demand for its products.

At this point, it looks that the stock would have an opportunity to gain additional upside momentum in the upcoming trading sessions in case S&P 500 does not suffer from a major pullback after inflation reports.

For a look at all of today’s economic events, check out our economic calendar.

Inflation: The Fed’s Guiding Light and the Biggest Worry for Investors

While indexes did manage to make small gains yesterday, they remain in negative territory for the year. The “buy-the-dip” trading mentality that helped indexes swiftly rebound from downturns the past couple of years has mostly been smothered by uncertainty about Federal Reserve monetary policy in the months ahead.

In other words lots of people are freaked out and a bit nervous about how stocks might perform in a rate hiking environment.

Just keep in mind, from June 2004 to June 2006 Fed Funds went from 1.00% to 5.25%. There were a total of 17 rate increases across this period, each 25 basis points and stocks did not get hammered.

Inflation

Today, inflation seems to be the Fed’s guiding light and investors are extremely concerned that data between now and the central bank’s next meeting on March 15-16 will fail to show any signs that price pressures are easing. That’s largely due to fallout from the Omicron Covid wave that further exacerbated supply chain dislocations and labor shortages.

Those two issues have been key drivers of escalating inflation which has pushed higher nearly every month since June of 2020. The only exceptions are October, when CPI came in flat, and November when it dipped a puny -0.1%.

Data to watch

Upcoming data to watch includes the January Consumer Price Index (CPI) tomorrow, the PCE Prices Index for January on 2/25, the February Employment Situation on 3/4, and March CPI on 3/10.

Today, investors will be scrutinizing the Energy Information Administration’s Petroleum Status Report. The report last week showed an unexpected decline in U.S. crude inventories, as well as raw oil at the Cushing, Oklahoma delivery point for WTI. Cushing inventories stood just above 30 million barrels as of January 28—down from 60 million barrels at the start of 2021, and down from 37 million barrels at the end of 2021. U.S. distillate levels are particularly concerning, with inventories as of January 28 falling to the lowest seasonal level in eight years.

The low inventories, which were -26 million barrels (-17%) below the pre-pandemic five-year average, are likely the result of booming manufacturing and freight demand. The American Petroleum Institute yesterday estimated that distillate inventories declined last week by -2.2 million barrels while U.S. crude supplies likely dipped by over -2 million barrels.

Most oil insiders believe the world oil market is under-supplied with OPEC+ struggling to meet production targets and economic activity rapidly rebounding from the Omicron wave that swept the entire globe.

Analysts think that signs of easing tensions between Russia and the West could stall the current rally in oil prices but it will likely only be temporary as supply concerns escalate.

On earnings front, today’s highlights include Bunge, Cerner, CVS, Disney, GlaxoSmithKline, Honda, Mattel, MGM Resorts, Motorola, O’Reilly Automotive, Toyota, Twilio, and Uber.

Walt Disney’s Earnings to More Than Double in Q1

Walt Disney, a family entertainment company, is expected to report its fiscal first-quarter earnings of $0.68 per share, which represents year-over-year growth of over 112% from $0.32 per share seen in the same period a year ago.

The family entertainment company would post revenue growth of over 30% to $21.15 billion. The company has beaten earnings estimates in most of the quarters in the last two years, at least.

“From our last report, the stock price has declined by 20% to $140.03 from $175.48 in Oct’21. The decline in the most recent quarter was due to higher market expectations for subscribers, which did not pan out for the company in the most recent quarter, as the company ended the fourth quarter and fiscal year with over 118mn global paid Disney+ subscribers, reflecting over 2mn net additions from Q3FY21,” noted Shejal Ajmera, Head of Research at Crispidea.

“The company has given guidance on reaching in range of 230-260mn paid Disney+ subscribers globally by the end of the fiscal year 2024. We anticipate that if the company meets or exceeds this guidance, it will gain investor trust in terms of subscription revenue generated by the company, as more paid subscribers lead to more revenue for Walt Disney.”

Walt Disney stock traded 0.73% higher at $142.02 in pre-market trading on Monday. The stock slumped over 8% so far this year after falling more than 14% in 2021.

Analyst Comments

“Disney is building content assets that enable it to take advantage of the significant direct-to-consumer streaming opportunity ahead. Disney’s underlying IP remains best-in-class, supporting long term content monetization opportunities,” noted Benjamin Swinburne, equity analyst at Morgan Stanley.

“During this period of FCF pressure from Parks closures, ESPN’s FCF generation is key to driving down leverage. Historical cycles suggest a potential return to above prior peak US Parks revenues in FY23.”

Walt Disney Stock Price Forecast

Twenty-one analysts who offered stock ratings for Walt Disney in the last three months forecast the average price in 12 months of $194.05 with a high forecast of $229.00 and a low forecast of $165.00.

The average price target represents a 36.64% change from the last price of $142.02. Of those 21 analysts, 14 rated “Buy”, seven rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price to $170 with a high of $215 under a bull scenario and $105 under the worst-case scenario. The investment bank gave an “Overweight” rating on the entertainment company’s stock.

Several other analysts have also updated their stock outlook. MoffettNathanson lowered the target price by $10 to $165. Guggenheim cuts the target price to $165 from $205. Wells Fargo cut the target price to $196 from $203.

Technical analysis suggests it is good to sell as 100-day Moving Average and 100-200-day MACD Oscillator signals a strong selling opportunity.

Check out FX Empire’s earnings calendar

Best Stocks, Crypto, and ETFs to Watch – Disney, Twitter, Bitcoin, Bonds in Focus

Dow component Walt Disney Co. (DIS) fell to a 15-month low in January, continuing a major downtrend that relinquished more than 36% of the stock’s value into January. Disney+ subscription growth has slowed rapidly while churn has increased, with many viewers disappointed by mediocre programming, especially in the Star Wars and Marvel ecosystems. Cruise ships and theme parks are struggling as well while theatrical releases have missed analyst projections. The company reports Q1 2022 earnings on Wednesday evening.

Twitter Inc. (TWTR) sold off with Meta Platforms Inc. (FB) last week, testing January’s 18-month low, but got a lift after upbeat reports from Amazon.com Inc. (AMZN) and Snap, Inc. (SNAP). Given the whipsaws, expectations are low ahead of Thursday’s pre-market report, when the company is expected to post a profit of $0.34 per-share. If met, earnings-per-share (EPS) is unlikely to generate much upside because would mark a lower profit than the same quarter last year.

iShares 20+ Year Treasury Bond ETF (TLT) fell to an 8-month low on Friday while 10- and 30-year bond yields shot up to multi-month highs. This price action could signal the next wave in an inflationary spiral that sends worldwide inflation much higher in coming months. U.S. growth stocks ignored the selloff during the mixed session but correlation between higher rates and lower equity prices could easily trigger another stock market decline.

Bitcoin (BTC) rallied to a two-week high on Friday, heading into the third test of 50-day moving average resistance since the cryptocurrency broke support at that level in November. Weekly relative strength indicators have flipped into buy cycles, raising odds it will mount this barrier and head into tougher resistance near 44,000. Despite the bounce, it isn’t wise to place aggressive long-side bets at this time because monthly readings are still firmly engaged in sell cycles.

Wynn Resorts LTD (WYNN) reports Q4 2021 earnings after Tuesday’s closing bell, with analysts looking for a loss of $1.25 per-share on just $995.28 million in revenue. If met, the loss-per-share will mark a 51% improvement compared to same quarter last year. Las Vegas operations are slowly returning to pre-pandemic levels but Macao continues to struggle, due to China restrictions. However, the government has just issued guidelines for license renewal that should ease pressure on the island’s major players.

Catch up on the latest price action with our new ETF performance breakdown.

Disclosure: the author held no positions in aforementioned securities at the time of publication.

Wall Street Week Ahead Earnings: KKR, Walt Disney, Coca-Cola, Twitter and PepsiCo in Focus

Investors will focus on December quarter earnings for stocks that are economically sensitive, which should show better profits than technology stocks. Increasing Treasury yields and risk aversion could hit the stock market hard over the coming months. In addition, investors will closely monitor the latest news on the rapidly spread Omicron coronavirus variant to see how it impacts earnings in 2022.

Earnings Calendar For The Week Of February 7

Monday (February 7)

TICKER COMPANY EPS FORECAST
ACM AECOM $0.77
CHGG Chegg $0.13
HAS Hasbro $0.85
LEG Leggett & Platt $0.73
ON ON Semiconductor $0.94
THC Tenet Healthcare $1.49
TSN Tyson Foods $2.01

 

Tuesday (February 8)

IN THE SPOTLIGHT: KKR

The U.S.-based investment firm KKR & Co is expected to report its fourth-quarter earnings of $1.02 per share, which represents year-over-year growth of over 108% from $0.49 per share seen in the same period a year ago.

The company that manages multiple alternative asset classes would post revenue growth of 17% to $784.8 million. It is worth noting that the company has consistently beaten consensus earnings estimates in the last two years, at least.

“Strong near-term growth with fundraising supercycle and GA accretion coming into earnings, but we see this reflected in the price at the current valuation for a business model with greater earnings contribution from the balance sheet (40%). While strong investment performance could drive upward estimate revisions, we have less visibility on more episodic investment income gains,” noted Michael Cyprys, equity analyst at Morgan Stanley.

“Mgmt’s increased focus on expanding the platform with adjacent strategies and scaling successor funds should drive higher fee-related earnings (FRE).”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 8

TICKER COMPANY EPS FORECAST
BP BP $1.18
IT Gartner $2.47
HOG Harley-Davidson $-0.37
LYFT Lyft $-0.46
PFE Pfizer $0.85

 

Wednesday (February 9)

IN THE SPOTLIGHT: WALT DISNEY

Walt Disney, a family entertainment company, is expected to report its fiscal first-quarter earnings of $0.68 per share, which represents year-over-year growth of over 112% from $0.32 per share seen in the same period a year ago.

The family entertainment company would post revenue growth of over 30% to $21.15 billion. The company has beaten earnings estimates in most of the quarters in the last two years, at least.

Disney is building content assets that enable it to take advantage of the significant direct-to-consumer streaming opportunity ahead. Disney’s underlying IP remains best-in-class, supporting long term content monetization opportunities,” noted Benjamin Swinburne, equity analyst at Morgan Stanley.

“During this period of FCF pressure from Parks closures, ESPN’s FCF generation is key to driving down leverage. Historical cycles suggest a potential return to above prior peak US Parks revenues in FY23.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 9

TICKER COMPANY EPS FORECAST
AFG American Financial Group $2.98
CVS CVS Health $1.56
HMC Honda Motor $0.95
RDWR Radware $0.13
SGEN Seagen $-0.74
TM Toyota Motor $3.76
UBER Uber Technologies $-0.33

 

Thursday (February 10)

IN THE SPOTLIGHT: COCA-COLA, TWITTER, PEPSICO

COCA-COLA: The world’s largest soft drink manufacturer is expected to report its fourth-quarter earnings of $0.41 per share, which represents a year-over-year decline of over 12% from $0.47 per share seen in the same quarter a year ago. However, the company’s revenue would grow nearly 4% to $8.94 billion.

TWITTER: The social media giant is expected to report its fourth-quarter earnings of $0.35 per share, which represents year-over-year growth of about 8% from $0.38 per share seen in the same period a year ago.

The company would post revenue growth of over 21% to $1.57 billion. Twitter expects revenues of approximately $1.5 billion to $1.6 billion in the fourth quarter of 2021. GAAP operating income is expected to range from $130 million to $180 million, according to ZACKS Research.

With a focus on engineering and products, Twitter expects to increase headcount and costs by 30% or more in 2021. In 2021, the company expects total revenues to grow faster than expenses.

“Lack of Negative Revisions and Relative Valuation: Valuation continues to be expensive, but we think investors are likely to continue to pay a premium for Twitter (TWTR) given 1) continued turnaround progress and 2) platform scarcity,” noted Brian Nowak, equity analyst at Morgan Stanley.

“Execution Risk Remains Around Driving Advertiser ROI: Advertiser ROI has clearly improved on Twitter, but the company needs to improve ad targeting and measurability to compete with the larger players. To do that it will have to further personalize the content that users see and use its data more effectively, both of which remain key strategic challenges (and priorities) for management.”

PEPSICO: The Harrison, New York-based global food and beverage leader is expected to report its fourth-quarter earnings of $1.52 per share, which represents year-over-year growth of over 3% from $1.47 per share seen in the same period a year ago.

The U.S. multinational food, snack, and beverage corporation would post revenue growth of about 9% to $24.35 billion. It is worth noting that the company has consistently beaten consensus earnings estimates in the last two years, at least.

The company revised its organic revenue growth to 8% from 6% previously. The company estimates core earnings of $6.20 per share for 2021, compared to $5.52 in 2020, according to ZACKS Research.

PepsiCo struggles with supply-chain headwinds that have caused it to increase costs and limit its output. Investors will want to know whether the beverage company is winning this battle when it reports its financial results for the fourth quarter of 2021 on Thursday, February 10.

“For the quarter, we are expecting PepsiCo (PEP) to deliver EPS of $1.47, which implies flat YoY growth and is 4 pennies below consensus EPS of $1.51. Our $1.47 4Q21 estimate implies FY21 EPS of $6.20, which is at the low end of management’s expectation to deliver “at least” $6.20 in EPS and may ultimately prove conservative given PepsiCo’s (PEP) history of outperforming expectations. Since 1Q18, we can see that PEP’s reported EPS has come in above consensus in 14 out of the past 15 quarters, with an average upside surprise of+5%,” noted Vivien Azer, equity analyst at Cowen.

“As we are already almost a month into the new year, all eyes will be on PepsiCo’s (PEP) initial FY22 guidance. As a reminder, on the last earnings call management noted that at the time they expected FY22 performance to be in line with its stated long-term targets, which means MSD (+4-6%) organic revenue growth and HSD core constant currency EPS growth.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 10

TICKER COMPANY EPS FORECAST
AZN AstraZeneca $0.78
EXPE Expedia Group $-0.01
GDDY GoDaddy $0.41
K Kellogg $0.8
MCO Moody’s $2.3
PEP PepsiCo $1.52
TWTR Twitter $0.16
WU Western Union $0.53

 

Friday (February 11)

TICKER COMPANY EPS FORECAST
APO Apollo Global Management $1.08
D Dominion Energy $0.93
FTS Fortis $0.58
MGA Magna International $0.81

 

Coinbase Welcomes Former Netflix Employee Brian Rocha

As crypto adoption increases, many people are tempted to join the crypto business because of its mainstreaming and non-stop growth. Who knows if joining a big crypto firm now is like joining Google or Amazon in the 90s?

Brian Rocha, a veteran employee that comes from the entertainment and media business, has recently joined Coinbase as the new Head of Content Strategy, according to his following Linkedin post comment:

“I’m excited to share that today I will be joining Coinbase! After having spent the past 15 years working with both legacy and new media and entertainment companies, I’m excited to take on a new opportunity building content strategy for the #crypto, #blockchain, and #web3 world”

About Brian Rocha

Brian Rocha has been working for media and entertainment companies during his professional career. Netflix was his most recent experience before joining Coinbase, where he worked nearly five and a half years as a Content Strategy & Analysis manager and director.

He studied Economics at UCLA. Graduated in 2009 while he was working as a financial analyst at The Walt Disney Company.

After The Walt Disney Company, he joined Warner Bros. Entertainment Group of Companies to work as an International Digital Development Manager until he joined Netflix.

The Crypto Industry Continues To Grow With Coinbase

Brian Rocha isn’t the only one who has recently joined the Coinbase team. The CEO and founder of Shopify, Tobias Lütke joined earlier this week Coinbase’s Board of Directors.

Tobias Lütke commented:

 “The concepts of decentralized finance and entrepreneurship exemplify the promise of Web3 where opportunity exists for the many, not the few,”

Last month, Coinbase partnered with Mastercard so the users could buy NFTs with credit and debit cards in their upcoming NFT marketplace platform.

Coinbase became a publicly-traded company in April 2021, marking a major milestone. Also last year, Shalin Pei, a former Facebook Senior Product Manager joined Coinbase in September 2021.

As crypto becomes more popular, there is no doubt more Web2 employees will follow Brian Rocha’s path.

Disney Shows NFT Interest With Latest Job Vacancy

Almost every brand has an NFT plan in the background, and Disney has finally revealed its own. 

The media and entertainment company announced this with a job posting for a new business development manager. The hire would be in charge of the Digital Experiences team at the company.

Disney Wants to Hire NFT Expert

The job description posted on January 30 states that part of the role of business manager would be to lead Disney efforts in the NFT space. This will include monitoring the dynamic marketplace, determining strategy, and managing partners.

With more than about ten responsibilities, Disney is focused on getting an experienced hand. Its requirements include a minimum of 5 years of experience with licensing and/or business development. It also requires knowledge and passion for Digital and NFT categories.

This won’t be the first time talks about NFT will involve Disney, but this is the clearest the company has been about its intention. In a recent interview with New York Times, former Disney chairman Bob Iger dropped hints about the company’s move into NFT and Metaverse.

Disney’s Metaverse Efforts

As a media company, Disney is well-positioned to take advantage of the growing industry because it already has assets to help its drive. 

Recently, journalists uncovered a virtual world simulator patent for Disney. The United States Patent and Trademark Office (USPTO) approved the patent last December. 

This was after the CEO, Bob Chapek, said during its November earnings call that the company is ready for its own metaverse.

The media giant also has a partnership with NFT marketplace Veve. The partnership was for the Gochain based platform to promote Disney streaming service Disney+ using the “Golden Moments” collection of digital tokens.

All of these point to a strategic plan by a leading company to become a relevant force in the NFT space. But it’ll find lots of competition with other media brands like YouTube, Meta, and Netflix, also exploring similar ideas.

Furthermore, many companies like Nike, Mercedes Benz, Coca-Cola, and more have already entered the NFT space with their own collections, partnerships, and patents. 

Best Stocks, Crypto, and ETFs to Watch – JETS, Disney, Block, and Bitcoin in Focus

U.S. Global Jets ETF (JETS) turned sharply lower in the mid-20s in November, more than two weeks before Omicron hit the newswires. The fund posted a 13-month low at 19.52 on Dec. 20th and bounced into Christmas, reversing at 50-day moving average resistance last week. A third trip into this critical level appears likely, raising odds for a breakdown that stretches into July 2020 support between 15 and 16. That could mark a low-risk buying opportunity, with the fast-moving infection generating massive herd immunity.

The January Effect will be in full swing this week, potentially lifting a basket of 2021’s biggest losers, especially at the beginning of this annual phenomenon. Dow component Walt Disney Company (DIS) looks like a great play in this regard, dropping to the bottom of the Dow performance list with a 15% annual loss. If you’re looking for even more risk, take a shot at fallen angel Block Inc. (SQ), formerly known as Square, which has punished shareholders with a 26% annual loss and swift decline to a 14-month low.

Walgreens Boots Alliance (WBA) kicks off January earnings in Thursday’s pre-market, reporting Q1 2022 results. The pharmacy chain is expected to report a profit of $1.32 per-share on a $32.7 billion in revenue. The stock ended 2021 on a high note, attracting strong foot traffic as a provider of COVID-19 vaccines and boosters. However, Morgan Stanley downgraded WBA just two weeks ago, projecting zero earnings-per-share (EPS) growth through 2023.

Bitcoin cycles are slowly turning in favor of buyers, raising odds for an oversold bounce that could generate intermediate profits. The crypto king has been holding support at 46,000 for five weeks, right at the .786 Fibonacci retracement of the June into November uptick. Two bounces have faded above 51,000, carving a rectangular pattern that could yield a breakout and short squeeze toward 58,000. However, aggressive profit-taking is advised because longer-term sell cycles remain in place, threatening another leg down after sellers get flushed out of the system.

Banking stocks have performed admirably in 2021 and should gain additional ground in 2022. The best play in this group is north of the border in Canada, where The Bank of Nova Scotia (BNS) has posted a 33% annual return.  Better yet, the $62.5 billion financial institution just completed a 7-year cup and handle breakout above resistance in the upper 60s, forecasting a long-term price target above 100.  And that’s not all because the stock also pays an outstanding 4.38% dividend yield.

Catch up on the latest price action with our new ETF performance breakdown.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Tech Giant Amazon restores Cloud Services Following Multiple Power Outages

Numerous apps and websites were affected when Amazon’s cloud services went offline. However, the tech giant has rectified the issue, and the platforms are now back online.

Amazon Restores Cloud Services

Tech giant Amazon announced earlier today that it had restored its cloud services following the third power outage it had experienced so far this month. The power outages affected the services of numerous websites and applications.

Earlier reports revealed that one of Amazon’s data servers on the US East Coast experienced a brief power outage. The power outage caused several internet-based service providers to experience service downtime. At the time, Amazon Web Service (AWS) said, “We can confirm a loss of power within a single data center within a single Availability Zone (USE1-AZ4) in the US-EAST-1 Region. This is affecting availability and connectivity to EC2 instances that are part of the affected data center within the affected Availability Zone,”

However, the tech company said it has now rectified the issue, and all the services are now back online. The latest outage affected the services of the office messaging app Slack, with users experiencing difficulties with file uploads, message editing, and other services.

The power outage that occurred earlier this month affected the services of some leading platforms, including streaming platforms Netflix and Disney+, trading app Robinhood and Amazon’s e-commerce store.

AMZN has Underperformed Recently

The shares of Amazon have underperformed in recent months, with the multiple power outages affecting the company’s activities. At press time, AMZN is trading at $3,410 per share, up by 0.05% in the past 24 hours.

AMZN’s tech
AMZN’s technical indicators show the stock is bearish at the moment. Source: FXEMPIRE

However, over the last four weeks, AMZN’s value has dropped by more than 4%. Regardless, AMZN has performed averagely this year, with its price up by only 4.6% over the last 12 months. The recent outages haven’t done the stock price any favors, and AMZN could end the year trading around the $3,400 level.

If Amazon experiences any outages before the end of the month, AMZN could trade below the $3,400 mark heading into 2022.

Former Disney Bob Iger says Pixar was his Best Acquisition

Bob Iger has been in charge of Disney for 15 years, turning it into one of the biggest entertainment companies in the world. He left his role as the chief executive officer of the company last year.

Iger Proud of Pixar Acquisition

Former Walt Disney boss Bob Iger revealed in a recent interview that the acquisition of Pixar was perhaps his proudest moment as the CEO of the company. He said he stepped down as the CEO of Disney after he realized he was becoming too dismissive of other people’s opinions.

Iger said, “I’m proud of a lot of the decisions that were made. Certainly, the acquisitions — I’d say of all of them — Pixar because it was the first. And it put us on the path to achieving what I wanted to achieve, which is scale when it comes to storytelling. That was probably the best.”

The former CEO acquired Pixar two months after he was appointed as Disney’s boss in 2005. Disney bought Pixar at $7.4 billion at the time, a move that was criticized by Wall Street analysts and former company executives.

However, Pixar has generated more than $11 billion for Disney at the global box office alone over the past decade and a half. “What I wanted to do more than anything is, I wanted to send a signal to everybody at Disney that it was a new day, that we were more open-minded about expansion, in particular about partnerships. That creativity was the most important strategy for the company. And Pixar, at that point, exemplified original storytelling and quality and creativity at in its highest form.”

Pixar Helped Disney’s Animation Drive

At the time of Pixar’s acquisition, Disney’s animation sector was struggling for ideas following the success of animations such as “The Lion King,” “Aladdin,” and “Pocahontas.” The acquisition of Pixar helped spark ideas into the Disney animation sector, leading to broader success over the past few years.

Iger pointed out that the acquisition of Pixar and its subsequent success helped Disney to convince other brands such as Marvel that their identity would not be lost once they joined the Disney team. The former CEO was also instrumental in the deal to acquire 20th Century Fox.

Why Disney Stock Is Down By 8% Today

Disney Stock Falls After Quarterly Report Misses Analyst Estimates

Shares of Disney found themselves under strong pressure after the company released its quarterly results. Disney reported revenue of $18.53 billion and adjusted earnings of $0.37 per share, missing analyst estimates on both earnings and revenue.

Disney+ subscribers grew by 2.1 milion to 118.1 million, but analysts expected stronger performance. Revenue from Disney parks increased due to reopening, but it looks that the market expected more aggressive growth.

The slow growth of Disney+ pushed some analysts to talk about saturation, suggesting that Disney+ may have trouble growing outside of the core fanbase. It should be noted that analysts rushed to cut their price targets for Disney stock, which has put additional pressure on the company’s shares.

What’s Next For Disney Stock?

Currently, analysts expect that the company will report earnings of $4.25 per share in the current fiscal year and earnings of $5.41 per share in the next fiscal year, so the stock is trading at roughly 30 forward P/E. This is not cheap, so Disney must show that it is able to grow at a robust pace to justify this valuation level.

The company stock has declined from the $200 level in March to the $160 level, but it remains to be seen whether traders will rush to buy the stock due to problems with Disney+ growth. The company noted that it was focused on content and that it should bring additional viewers to the platform, but the market is not buying into this narrative as it expected faster growth in 2021.

The stock may remain under pressure in the upcoming weeks as the company’s valuation remains rich while consensus estimates for the next years will likely move lower. There is some potential for multiple compression due to disappointing growth of Disney+. However, it should be noted that the stock may get some support from the “buy the dip” mentality which remains strong in today’s market.

For a look at all of today’s economic events, check out our economic calendar.

Walt Disney Shares Slump Premarket After Subscribers Growth Disappoints

Walt Disney shares slumped nearly 5% in pre-market trading on Thursday after the family entertainment company reported lower-than-expected earnings and revenue in the fiscal fourth quarter as slow growth in streaming users fell short of analysts’ expectations.

The Burbank, California-based company reported Q4 revenue of $18.53 billion in the fourth quarter, missing the Wall Street consensus estimates of $18.79 billion. The company reported earnings per share of $0.37, below the market consensus estimates of $0.52 per share.

Disney+ added 2.1 million subscribers, way below the market expectations of 10.2 million. That was also the tiniest jump since the streaming video service was launched, Reuters reported. Following this, Walt Disney shares fell nearly 5% to $166.30 in pre-market trading on Thursday.

By 2024, the company plans to have 260 million customers, and management expects the recent slowdown to be temporary.

Analyst Comments

Disney posted a weak end to fiscal 2021 as Disney+ only added 2.1 million customers, its lowest quarter yet, to end the year at 118 million subscribers. Still, the Disney+ subscriber base increased by 44.4 million in fiscal 2021, well ahead of the 18.4 million new users added at Netflix over the same period,” noted Neil Macker, senior equity analyst at Morningstar.

“While Netflix is the much larger service with almost 214 million subscribers around the globe, Disney+ is only available in just over 60 countries, many of which were added in the last year. Even with the slower-than-expected subscriber growth this quarter, we still project robust long-term growth for the service. We maintain our wide moat and fair value estimate of $170.”

Walt Disney Stock Price Forecast

Twenty analysts who offered stock ratings for Walt Disney in the last three months forecast the average price in 12 months of $215.32 with a high forecast of $263.00 and a low forecast of $175.00. The average price target represents a 23.43% change from the last price of $174.45. From those 20 analysts, 16 rated “Buy”, four rated “Hold” while none rated “Sell”, according to Tipranks.

However, technical analysis suggests it is good to sell now as 100-day Moving Average, and 100-200-day MACD Oscillator signals a strong selling opportunity.

Morgan Stanley gave the base target price of $210 with a high of $250 under a bull scenario and $135 under the worst-case scenario. The firm gave an “Overweight” rating on the entertainment company’s stock.

“Impact on our Overweight (OW) thesis: Our OW thesis on Walt Disney (DIS) shares is based on the view that Disney is one of a shortlist of global streaming platforms that can achieve significant scale and profitability, which combined with the earnings growth at its Parks business offers investors adjusted EPS growth from $2 in FY21 to $10 in FY25. In addition to this growth, the earnings mix shift will move away from legacy media earnings towards streaming and parks which should be accretive to ROIC and the multiple,” noted Benjamin Swinburne, equity analyst at Morgan Stanley.

“The F4Q results and the updated outlook was a mixed bag with respect to our thesis, but ultimately we see the negative near-term revisions as tied to the timing of content delivery in streaming and operating leverage at parks.”

Several other analysts have also updated their stock outlook. CFRA cut the target price by $20 to $200. Barclays slashed the target price to $175 from $210. Guggenheim cut the target price to $205 from $215. JPMorgan raised the target price to $230 from $220.

Check out FX Empire’s earnings calendar