Is it time to invest in Disney stock as shares plunge to new 12-month lows?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Nov 30, 2021
  • Disney shares on Tuesday declined by nearly 3%.
  • The stock now trades at new 12-month lows after falling more than 18% in the last two weeks.
  • Disney offers exciting growth prospects despite its steep valuation.

On Tuesday, Walt Disney Co. (NYSE:DIS) shares declined by nearly 3% despite agreeing to a renewal of channel carriage deal with Comcast Corp (NASDAQ:CMCSA). The stock has now plunged more than 18% over the last two weeks, pushing it to new 12-month lows. 

Disney’s current decline started a few days after missing analysts expectations in the most recent quarterly results announced on the 10th of November. Disney’s revenue and earnings came short of consensus Street estimates, sparking a sell-off.

Is Disney a safe bet?

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From an investment perspective, Disney shares trade at steep trailing 12-month and forward P/E ratios of 133.64 and 36.04, respectively. Therefore, value investors could opt for alternatives in the market.

However, although analysts expect its earnings to decline by 125% this year, they also forecast an average annual growth rate of about 42.58% over the next five years.

Therefore, the stock could be a compelling option for long-term growth investors.

Source – TradingView

Technically, Disney shares seem to be trading within a sharply descending channel formation in the intraday chart. As a result, the stock has plummeted deep into oversold conditions, creating a compelling entry opportunity for buyers.

Therefore, investors could target potential technical rebounds at about $150.41, or higher at $157.72. On the other hand, if the decline continues, the stock could find support at about $137.50, or lower at $127.88.

In summary, Disney looks like an exciting growth stock that could reward investors that are willing to overlook short-term turbulence.

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