Disney Shares Decline Despite Long-Term Bullishness

After hitting an all-time high of $147.15 on July 28 shares of Disney have been sliding steadily lower, despite massive long-term bullishness regarding the launch of the Disney Plus streaming video service, which will compete with the current king of streaming video – Netflix.

In the past month alone shares have lost nearly 6%, versus a loss of just 1.2% for the S&P 500. This highlights how badly Disney is lagging the broader market currently.

The question is whether this downturn will last beyond the November 12 launch of the Disney Plus streaming service, or will shares pick up once the uncertainties regarding the service begin to dissipate? Also in consideration will be the third quarter earnings for Disney, which are due on November 7.

Recently analysts have been cutting their forecast for Disney’s earnings, citing issues with the integration of Fox’s assets, and increased costs in relation to the rollout of the Disney Plus streaming service.

With those costs in mind, third quarter earnings are expected to be $0.97 a share, which is a drop of 34.5% versus the same quarter last year. Revenues are expected to be $18.91 billion, or an increase of 32.2% versus the same quarter last year. I think you can see how much costs have increased based on the expanding revenues and contracting profits.

All of that aside, the new streaming service from Disney is expected to deliver an impressive revenue stream for the company, thanks to the huge library of classic movies and blockbusters owned by Disney, including Star Wars and the Marvel universe.