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What Sent Disney Shares 5% Lower Wednesday?

By Daniel Miller - Jan 27, 2021 at 12:15PM

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On an unusual day in the markets, Disney shares tumbled. Here's what investors should keep in mind.

What happened

Shares of entertainment juggernaut The Walt Disney Company (DIS 2.52%) dropped as much as 5.3% Wednesday morning on a pretty wild and unique day of trading. Here's what investors need to know, and what they should keep in mind.

So what

Starting from the view up top, the Dow Jones Industrial Average dropped roughly a percentage point early Wednesday as Boeing pulled the index down after posting a record annual loss and additional charges due to issues surrounding the 777X aircraft. That initial drop was the Dow's largest decline since October. On the flip side, rampant speculation fueled in part by Reddit retail investors pushed struggling stocks with heavy short interest higher yet again with GameStop and AMC Entertainment Holdings soaring as much as 156% and 310% higher, respectively. With all the speculation noise, a broader decline in markets, and investors waiting to hear notes from the Federal Open Market Committee's (FOMC) January monetary policy decision Wednesday afternoon, it's understandable to see Disney's stock take a breather. However, that breather doesn't mean Disney doesn't have plenty going on itself, and that's what investors should keep in mind.

Disney plus streaming screen

Image source: Walt Disney.

Now what

Already Disney+ has performed well: The company's streaming service ballooned from 73.7 million subscribers at the end of October to 86.8 million as of Dec. 2. Of course, the company isn't planning to rest on these accomplishments. It announced during its investor day that it will launch 10 new Star Wars and Marvel series on Disney+ in the coming years, will add roughly 50 total new programming titles, and will release Raya and the Last Dragon simultaneously on Disney+ and in theaters this spring. Wednesday has been a little unusual for trading, but long-term investors in Disney should feel confident in the media company's ability to rebound and drive growth after the pandemic.

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Stocks Mentioned

The Walt Disney Company Stock Quote
The Walt Disney Company
DIS
$105.00 (2.52%) $2.58
The Boeing Company Stock Quote
The Boeing Company
BA
$124.04 (2.77%) $3.34
GameStop Corp. Stock Quote
GameStop Corp.
GME
$95.59 (-0.07%) $0.07
AMC Entertainment Holdings, Inc. Stock Quote
AMC Entertainment Holdings, Inc.
AMC
$11.61 (-3.49%) $0.42

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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