Kramer says Disney is a purchase, tearing down Wall Street vendors for misleading

Overview of the Mickey Mouse Ferris Wheel at Disney California Adventure Park at Disneyland Resort, reopened April 11, 2021 in Anaheim, California for outdoor dining and shopping.

Harunpi | Bauer-Griffin | GC Pictures | Getty Images

Walt Disney Co. (DIS) is a buy – even shares of the media and entertainment giant traded red in the evening after its financial second-quarter earnings. It is noteworthy that Thursday’s stock surpassed most of its losses as the session unfolded.

As per our rules explained below in this story the club is restricted from buying Disney. But, as always, this will not prevent us from sharing our recommendations and letting members know what we will do next.

“I think you should be a Disney buyer here,” Jim Kramer said during a “morning meeting” on Thursday.

The last row

Disney’s quarters weren’t perfect, as we said on Wednesday night, but it was absolutely fine, especially considering all the macro challenges. The market seemed to agree with us at first because the stock had become too much before it became negative in after-hours trading. Shortly after the opening, the stock hit a 52-week low below $ 100. As mentioned earlier, the shares reversed some of those losses.

We think Disney CFO Christine McCarthy’s comments during the earnings call were the main driver of the feeling of turning south. His comments on streaming subscriber growth in the second half of the year, in particular, appear to have intimidated investors. Kramer blasted Wall Street vendors for misinterpreting McCarthy’s comments.

The market may not be thrilled by the impact of China’s no-covid policy on Disney theme parks in Hong Kong and Shanghai. “They need Shanghai to get better. There’s nothing fun,” Kramer told CNBC on CNBC, pointing to the difficult business environment for all U.S. multinationals trying to operate in China at the moment.

What’s going on?

Things are going well for Disney, including strong demand in its US theme parks, which has helped its operating income surpass that of Wall Street. The opening weekend of the Marvel film also saw the success of “Doctor Strange in the Multiverse of Madness”.

“They have added 400 400 million [globally] In one movie they’re doing very well, “Kramer said.” People decided Disney wasn’t good, and they caught McCarthy, who is, in fact, a great CFO, and he says it’s ridiculous – ridiculous – for people who think he’s a guide. [subscribers] Down. “

McCarthy confirmed that Disney still expects Disney + customer engagement to be stronger in the second half of the year than in the first half of the year. But since first-half growth exceeded expectations, the CFO explained, second-half growth may not look as strong as Q1 and Q2 combined.

We think some investors are misinterpreting what this means for Disney + health. The club, on the other hand, is focusing on adding 7.9 million subscribers to Disney + the second quarter, while one of its main streaming competitors, Netflix, reported a decline in subscribers in the recent quarter. This tells us that Disney’s streaming strategy is different and effective.

Of course, Disney’s stock isn’t really working this year – it’s down about 34% year-to-date. These losses are worse than the S&P 500 and Dow Jones Industrial Average, but still, overall, it is a tough market. Wednesday’s results further show that this is a broken stock event, not a broken company.

That’s why we think it’s bought for weakness.

(Jim Kramer’s Charitable Trust Long DIS. See Here For a complete list of stocks.)

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