Wait for a Better Entry Point to Buy Disney Stock

DIS stock - Wait for a Better Entry Point to Buy Disney Stock

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Walt Disney (NYSE:DIS) is not having a magical year. DIS stock is down 22.39%. But more pain is yet to come. A section of investors believes the time is ripe for purchasing DIS stock. However, a few indications indicate that the stock will fall more before landing on a bottom.

In response to the Walt Disney Company’s decision to denounce the state’s anti-LGBT bill, Florida Republicans are making a legislative push for a special tax district targeting Disney itself. The Florida House voted 68-38 to pass a bill that would have ended all special tax districts created before 1968.

Reedy Creek was established in 1967 and allowed The Walt Disney Company to build up its power in the state of Florida. It took over many responsibilities that would typically be assigned to a local government. The company provide utilities, emergency services, and more for its Florida landholdings.

Reedy Creek allowed Disney to come in and establish itself as Florida’s largest private employer. That, in turn, led Disney to become one of the state’s biggest employers.

Plus, DIS investors will find the latest Netflix (NASDAQ:NFLX) subscriber numbers a shock to the system. Netflix has been a dominant force in the TV streaming industry for almost a decade. However, it reported a 200,000 fall in the first quarter. Disney is investing billions in the streaming space. So, a slowdown for the industry’s bellwether is not great news.

DIS Stock Is a Hold (for Now)

DIS stock has been able to grow its revenue and earnings per share by expanding into new markets such as theme parks, cruise lines, and direct-to-consumer media services. The company also plans to increase its focus on digital media distribution in the coming years because it believes it will be more profitable than traditional distribution methods in the long run.

Disney’s revenue sources are diverse. They include films (both animated and live-action), television programming, video games, publishing (books), consumer products like toys and clothes, theme parks like Disneyland Paris and Walt Disney World Resort Orlando, digital media including ESPN+, ABC Studios-owned Freeform network.

However, the latest developments will weigh down DIS stock in the short run. Therefore, this is not the best time to invest in this one.

The company is gearing up for several high-profile releases in the coming months. They are sure to generate a lot of attention. Thanks to attractions like Star Wars: Galaxy’s Edge and Avengers Campus,” international visitors to the company’s flagship resorts in Orlando and California will increase. Additionally, new parks are opening throughout the world.

You can also expect another Avatar this year and sequels for Dr. Strange, Thor, and likely another Black Panther movie as well. Therefore, DIS stock will shrug off the negative momentum. But do not expect all of this to happen overnight.

On the publication date, Faizan Farooque 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 InvestorPlace.com Publishing Guidelines.

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.


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