Disney Stock Could More Than Double If It Recovers To Pre-Inflation Shock Highs

Disney stock currently trades at $92 per share, about 54% below its pre-inflation shock high of about $202 seen on March 8, 2021. The sell-off has been driven by Disney’s heavy investments into its streaming business, which remains deeply lossmaking, although the company’s surging theme park business has helped to partly offset the impact. The stock could have considerable potential for gains if its recovers to these 2021 levels. Disney stock was trading at a low of about $84 in December and has gained about 9% from those levels, following the return of Bob Iger as CEO and also due to the company’s recent reorganization. In comparison, the S&P 500 gained about 12% during this period.

Returning to the pre-inflation shock level means that Disney stock will have to gain about 120% if the stock recovers from $92 currently to its pre-shock highs of $202 per share. While it’s possible that the stock may recover to those levels, we presently estimate Disney valuation to be around $117 per share, about 27% ahead of the current market price. While we believe that Disney is undervalued, we think that the upside for the company in the near term could be limited by slower subscriber growth on the streaming side due to mounting competition. Our detailed analysis of Disney’s upside post-inflation shock captures trends in the company’s stock during the turbulent market conditions seen over 2022. It compares these trends to the stock’s performance during the 2008 recession.