By Camilo Botia
Disney delivered a strong earnings report for its fiscal first quarter, beating Wall Street estimates and raising its dividend by 50%. The company also announced a $1.5 billion investment in Epic Games, the maker of Fortnite, as part of a strategic partnership.
The entertainment giant reported earnings of $1.22 per share, excluding some items, on revenue of $23.5 billion, slightly below analysts’ expectations. The company attributed its earnings growth to cost savings and the recovery of its international theme parks, which saw a fourfold increase in profit and a 35% rise in sales.
Disney also issued an optimistic outlook for the entire year, saying it expects to grow its profit by at least 20% to about $4.60 per share, well above the consensus estimate of $4.27. The company plans to return more cash to shareholders, increasing its dividend to 45 cents per share and authorizing a $3 billion share buyback program.
The company’s stock jumped 8.7% in after-hours trading, reaching its highest level in almost a year. Investors also cheered the news that Disney is acquiring a 10% stake in Epic Games, the developer of the popular online game Fortnite, for $1.5 billion. The deal will give Disney access to Epic’s technology and content and a loyal fan base of gamers. Also, The company said it expects to add up to 6 million new Disney+ subscribers in the current quarter and reach breakeven by the end of the fiscal year. It also announced a new streaming service that will combine ESPN content with shows from Fox and Warner Bros. Discovery, aiming to attract more sports fans and that could push the stock price higher.
As a result, the stock price achieved a fifth consecutive bullish closing price, at $99.23, on Thursday’s closing. The price is getting closer to a significant psychological level at around $100 per stock. So far, there have been gains of 3.38% since the beginning of the month, and the RSI indicator shows there is still room for more bullish movements in the following days before entering into an overbought market. There is a second resistance at $102.68.
On the other hand, there are two significant support levels for the stock, one at $91.74 and a second support around $88.66, where the 200-day simple moving average is, which has previously supported the price and represents a significant floor for Disney’s stock.
