Buy Disney Stock After Near-50% Decline Amid Strong Trends

Stocks to buy

Despite Disney (NYSE:DIS) stock hitting 52-week lows, it could be a good time to swoop in and buy. While DIS stock has been in a near free-fall lately, the business is seeing improving trends.

For instance, travel-industry execs have laid out the bull case despite turmoil in the markets and raging inflation. United Airlines  (NASDAQ:UAL) CEO Scott Kirby said, “The demand environment is the strongest it’s been in my 30 years in the industry.” This comes after the company issued its strongest ever second-quarter outlook. 

American Airlines (NASDAQ:AAL), Visa (NYSE:V) and American Express (NYSE:AXP) are also optimistic about travel ramping back up. American Express said that, “86% of consumers expect to spend more or the same on travel in 2022 compared to a typical pre-pandemic year.” 

While the geopolitical environment remains uncertain, we expect continued growth driven by a robust travel recovery,” says Visa Chairman and CEO Alfred F. Kelly, Jr. 

All in all, increasing travel numbers are good news for Disney, while its parks should continue to run strong. From the company’s previous earnings release in February, Disney said it had “record revenue and operating income at our domestic parks and resorts.” 

Given the recent travel trends, one can safely assume that its parks are doing even better now. 

Switching gears to another part of Disney’s business, streaming shouldn’t be going the way of Netflix (NASDAQ:NFLX). Despite a more competitive environment, Disney’s streaming platforms have momentum. In its most recent report, Disney had a “significant increase in total subscriptions across our streaming portfolio to 196.4 million, including 11.8 million Disney+ subscribers added in the first quarter.” That was well above estimates calling for 7 million new subs.

Lastly, HBO and HBO Max added 3 million subscribers in its most recent quarter. However, we will get a better idea on Disney’s streaming platforms when it reports earnings next week on May 11. 

As for the charts, any notable rally in DIS stock could easily fling it back up into the $120 to $125 area. If it can climb that high, it will be key to see if it can reclaim the $128 to $130 area. This zone was prior support, so bulls will have to be cautious that this area could act as resistance. 

However, back above this zone and the $137 to $140 area could be next. 

On the downside, DIS stock has two notable areas of interest: Between $100 to $106 and $80. 

The first zone comes into play near a psychologically relevant price ($100) and the 78.6% retracement. Further, it would put the stock down 50% from the high, which may be enough to attract buyers. 

The second level — $80 — is around where DIS stock bottomed in March 2020. It’s also where the rising 200-month moving average comes into play.

On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

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