Is it time to buy Disney? Stock reaches rare support level for the 3rd time in 50 years

Disney is making headlines for a mix of reasons, from announcing future events and finalizing cruise itineraries to grappling with DirecTV’s channel removal and addressing a wrongful death lawsuit.

Amid these developments, the company’s stock performance has been a focal point for investors.

Currently, Disney’s stock is up just 10% over the past year and is trading at the same level it was a decade ago. But with its stock testing a key historical support level now might be a pivotal time for investors.

Touching a historical trendline

Here is the monthly Disney chart (log scale) since 1968:

Source: TradingView

Disney’s stock chart, spanning from 1968 to the present, reveals a significant historical trendline. Since first bouncing off this trendline in 1974, the stock has tested this level three times.

Currently, the stock is hovering around this critical support zone, suggesting it could either stabilize or bounce back shortly. This historical pattern may provide traders with a bullish signal if the stock rebounds off this support level.

‘Deadpool & Wolverine’ success

A major recent success is Marvel’s “Deadpool & Wolverine,” which has topped North American box office rankings for two consecutive weekends.

The film has grossed nearly $600 million, including $15.2 million this past weekend.

This success highlights the value of Disney’s 2019 acquisition of 21st Century Fox in a $71.3 billion merger.

After a period of adjustment, Disney is seeing significant returns from the merger, with three of its top four releases this year coming from 21st Century Fox properties: “Deadpool & Wolverine,” “Kingdom of the Planet of the Apes,” and “Alien: Romulus.”

The financial impact of these successful titles is expected to benefit Disney’s bottom line and reward shareholders. The profitability of these titles is a positive indicator of the company’s future financial health and shareholder returns.

Doubling down on parks

Disney’s parks and experiences segment has become a crucial revenue driver, contributing up to 70% of the company’s operating income in 2023.

In response, Disney announced a significant increase in its investment in parks, doubling its capital expenditures to $60 billion over the next decade.

This strategic move reflects the company’s commitment to capitalize on the strong performance of its parks segment and reinvest in infrastructure.

Under CEO Bob Iger, who has been instrumental in shifting focus from original content spending to enhancing park experiences, Disney appears to be on a promising path.

Historical data suggests that increased investment in parks and infrastructure is likely to yield substantial returns, bolstering the company’s financial outlook.

The company’s strong performance in its parks segment and the profitability of recent film releases indicate a positive trend. For those looking to add Disney to their portfolio, the stock’s current technical and fundamental indicators may provide a solid buying opportunity.