Sunday, October 30, 2016

The Unhappiest Stock On Earth

The Walt Disney Company  [DIS]

     What some people may not know, Disney bought Capital Cities/ABC back in 1995 and came into the ownership of ESPN. For the last few years ESPN has seen a steady decrease in the amount of *subscriptions each month and this last one was the worst they have ever seen. ESPN lost an estimated 621,000 subscribers in the last month. That's more than double the last couple months. So why will this impact Disney stock in such a negative way? ESPN accounts for about 75% of Disney's cable revenues. I looked up Disney's latest quarterly earnings and took a screenshot that you will see below.





     I highlighted the areas of importance and concern. Basically they are saying they the Cable Networks revenue grew by 1% because of growth by ESPN. However, they went on to say that the growth was offset by programming costs and subscriber decline. 

     In the longer term, this won't have that big of an impact on Disney. They'll still be raking in like, $7 billion a year from ESPN, but it's a decline of what it has been. If we look in the shorter term - this week and up until they release Q4 data - the stock will most likely fall. ESPECIALLY Monday. This is huge, negative news that will scare people into selling. I won't sell, but I don't think I'll buy any more. I'll look into it and try and find a bottom here pretty soon, maybe after Nov 10th, (Q4) but the chart that looked so good won't likely continue its uptrend.

     CONCLUSION: This week will be poor. Q4 will likely be poor. Wouldn't be surprised to see it hit $90 ish. Have a good Sunday folks.

GO TRIBE. #RALLYTOGETHER






*People are moving away from cable packages and toward streaming services (Netflix, Hulu, HBO Go). A subscription to ESPN is what you buy from the cable company. 
 
Edit: Stupid Cubs, again. 

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