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Disney Call Option Holders Hit the Exit as Shares Sink Amid Weaker Guidance
$Disney (DIS.US)$ call option holders are rushing for the exit before the contracts become worthless as shares of the entertainment giant tumble after giving a weaker fiscal third-quarter outlook for its entertainment direct-to-consumer.
The company also gave a full year outlook that's slightly below Wall Street estimates. The company expects full year adjusted earnings per share to grow 25%. Analysts expect a 25.3% growth, the Wall Street Journal reported. Shares plunged 10% to $104.428 at 12:32 p.m. in New York.
Revenue for the second quarter ended March 30 reached $22.08 billion, according to Disney's earnings release on Tuesday. That missed the $22.14 billion expected by analysts polled by Capital IQ, MT Newswires reported. The weaker guidance and revenue miss overshadowed the positive development in the company's profit. Disney reported second quarter adjusted earnings of $1.21 a share, beating analysts' estimates of $1.10.
Revenue for the second quarter ended March 30 reached $22.08 billion, according to Disney's earnings release on Tuesday. That missed the $22.14 billion expected by analysts polled by Capital IQ, MT Newswires reported. The weaker guidance and revenue miss overshadowed the positive development in the company's profit. Disney reported second quarter adjusted earnings of $1.21 a share, beating analysts' estimates of $1.10.
About 304,670 call options were traded as of 1:01 p.m. in New York, almost double the put options. The most-active contract was the call option that gives the holder the right to buy Disney shares at $108 each by the end of the week, with 17,360changing hands so far, according to data compiled by moomoo. The price of those calls shrank by 97% to less than 30 cents.
A close second are $107 calls expiring by Friday, with volume climbing to 17,109 Tuesday morning compared with 74 contracts traded just a day earlier.
CFRA cut its price target on Disney by $23 to $116, as it sees the company's total enterprise value falling to 13.4 times earnings before interest, taxes, depreciation and amortization, below its three-year average of 13.6 times, MT Newswires reported.
"We have less confidence in DIS realizing consistent results in its Entertainment and Sports units," CFRA said, according to the report.
Among Disney options expiring next week, the heaviest volume was in calls that give the holder the right to buy the company's shares at $115 each. About 13,180 contracts have traded so far as the value of those calls sank 96%.
But after the sell-off, 10 of 15 technical indicators tracked by moomoo are flagging that the stock is now oversold and could be poised for a rebound.
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Luzi Ann Santos
Moomoo Senior News and Community Manager
Former editor at Bloomberg, ex-commentary editor at Lazard. Posts aren’t investment advice. Views are just mine.
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RipTides : Disney sucks.
73922152 : That's what I came here to say! But I can't say that to my sister. Let's take Hollywood's money and run!!!
Svetlana Polishuk : yes
PAUL BIN ANTHONY : 3 years ago when I get rewarded