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Why Walt Disney Co (DIS) Stock Took a Beating Today

Walt Disney Co (NYSE:DIS) shares are getting slammed lower on Thursday after issuing disappointing per-share earnings guidance at a Bank of America Merrill Lynch conference. As a result, the Consumer Discretionary SPDR (ETF) (NYSEARCA:XLY), which counts DIS stock as its fifth-largest holding, gave back just shy of a percent. (The 5.5% drop in Comcast Corporation (NASDAQ:CMCSA) is also weighing on the XLY ETF.)

Why Walt Disney Co (DIS) Stock Took a Beating Today
Why Walt Disney Co (DIS) Stock Took a Beating Today

Source: Shutterstock

Specifically, DIS stock took its sudden mid-day turn when Disney CEO Bob Iger said he expects fiscal 2017 earnings to be roughly in line with the fiscal 2016 result.

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The drag appears related to the wheel spinning underway, as the company prepares to launch its own digital streaming “over-the-top” service after announcing it would pull its content from Netflix in 2019.

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Iger announced that Marvel and “Star Wars” content would be on this platform as well. ESPN will kick things off in 2018 before the rest of the Disney content vault is added in 2019.

Adding to the pressure on DIS stock was an admittance that no blockbuster movie releases are scheduled through the end of the fiscal year.


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The result pushes shares down to November 2016 levels as prices move in on the 200-week moving average, a level not broken since the summer of 2011.

Shares of Disney have quadrupled in price since then. Prices are down nearly 17% from the April high near $115 already and are down more than 5% in mid-day trading on Thursday.

Bottom Line for DIS Stock

The company will next report results on Nov. 9 after the close. Analysts are looking for earnings of $1.26 per share on revenues of $13.7 billion.

When the company last reported on Aug. 8, earnings of $1.58 beat estimates by three cents despite a 0.3% drop in revenues.

What’s more, DIS stock is surrounded in murmurs regarding Bob Iger’s intention to retire in 2019, the chatter of a possible acquisition of Twitter Inc (NYSE:TWTR) and the success of Disney’s parks business with Star Wars Land, which opens in 2019. Toy Story Land will open in Orlando next summer.

Anthony Mirhaydari is the founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.

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