The world’s largest entertainment company, Disney (DIS), has faced several operational challenges over the past year due to COVID-19 related restrictions. While the company reported solid year-over-year growth in its most recent quarter, it missed Wall Street’s expectations. The stock dipped in price following the earnings release. So, the question is, considering DIS’ stretched valuation, should one buy it on the recent dip? Read on.Leading entertainment company Walt Disney Co. (NYSE:DIS) operates parks, media and entertainment distribution, and three content groups—studios, general entertainment, and sports—that are focused on developing and producing content for DTC, theatrical and linear platforms. Shares of this Burbank, Calif.-based media giant are down 13.2% in price year-to-date. Over the past month, the stock has slumped 10.8% to close yesterday’s trading session at $157.33. Furthermore, the stock is currently trading below its 50-day and 200-day moving averages.
Several operational disruptions have taken a toll on the company due to the COVID-19 pandemic and consequent lockdowns that necessitated the closure of its theme parks and suspension of its cruise line departures. The company incurred significant revenue losses. However, its Disney+ streaming service thrived. The "Black Widow", which debuted on Disney+, took in $80 million in domestic box office receipts in its opening weekend, making it the biggest premiere since the pandemic began.
DIS shares plummeted 7% in price on November 11, marking it their worst session since June 2020, after the company reported a slowdown in subscriber growth for its streaming service. The company also missed consensus estimates for its top and bottom lines in its last reported quarter. Disney added 2.1 million Disney+ subscribers to hit 118.1 million, in line with CEO Bob Chapek's prediction of “low single-digit millions” of fourth-quarter streaming subscribers back in September. Also, DIS is facing competitive threats from Netflix Inc. (NASDAQ:NFLX) and Amazon.com, Inc. (NASDAQ:AMZN).