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Can We Expect A Continuation Of Downward Momentum For Disney?

Walt Disney Company is a worldwide entertainment company which includes Disney Parks, Experiences and Products; Disney Media & Entertainment; and Studios Content. It started off as a cartoon studio in the 1920s and has progressed to one of the most recognisable companies in the world.

Last week Walt Disney Company announced its results which presented some concerns and sent the shares down for the week. The main concern with their results was the slowdown in their streaming service Disney+ users, which overshadowed them beating expectations on their overall profits. The CEO, Robert Chapek has stated that movie and television shows were resuming normal production after the disruptions caused by the pandemic and they would produce new offerings to try increase the users to Disney+, ESPN+, Hulu and Hotstar.

A large part behind this being such a concern is many thought that Disney would be able to challenge the like of Netflix, so by a slowdown of growth led worries about this. Disney will now likely focus on trying to build its streaming service quickly to try compete effectively as consumers continue to move away from cable TV. Alongside this Disney’s theme parks continue to be in recovery as limits on the number of people remain in place as we are not rid of the pandemic just yet. This has resulted in their shares decreasing recently in a bit of a consolidation period as demonstrated below.

The share price appears to be trading within a descending channel as the shares recently touched the lower end of this and the support level demonstrated by the blue dashed line. The shares increased a little bit throughout the week as the support held slightly but were not able to recover the strong bearish candle. A retest may be seen in the coming weeks and if it breaks this level then we may see a continuation to the 61.8% Fibonacci level as demonstrated on the chart. It will also be interesting to see if the shares continue within the descending channel, if they break this level on the upside then we could see a potential change in momentum towards the upside. Whereas if they break the lower level, then we could see some stronger bearish momentum. This may be an interesting one to watch over the coming weeks.

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