Analysis: DIS

After you receive this Alert, we will be initiating a position in Disney (DIS) , buying 150 shares at roughly $172.57. Following the trade, DIS will represent 0.68% of the portfolio.

Shares of Disney took a spill this afternoon in reaction to comments made by CEO Bob Chapek at the Goldman Sachs 30th Annual Communacopia conference.

After reading through the transcript of the event, yes the market may not like some of the noise coming from Disney+ subscriber numbers, or the fact that the return of dividends and share repurchases are still in the "distant future" as management continues to prioritize its cash flow towards funding new areas of growth.

But despite the headlines impacting the share price today, we see no reason to feel any less bullish about the long-term prospects at Disney. For starters, we continue to forecast a robust recovery at the theme parks. After reading Chapek's update, we are encouraged by how he said that attendance has recovered "quite nicely" after experiencing a delta-related slowdown shortly after the company's last earnings call.

Additionally, one thing that we have come to accept with Disney is that the quarter-to-quarter subscriber growth numbers for Disney+ will be noisy and lumpy at times. But most importantly, Chapek gave zero indication that he is any less confident in the company's long-term sub growth forecast and the timeline of when the streaming business will reach profitability. We feel this makes today's pullback a short-term blip and not a thesis changer.

We are keeping this Alert brief because we want to be quick to take advantage of today's intraday pullback. But what you should know is that the stock is back trading at a level that is right around the price we exited our previous position back in June. One thing that you have heard us say over and over again is that if DIS ever got back or below the price where we sold last, then we would buy it back. This unwillingness to chase it at higher levels is being rewarded right here with the shares back trading around $171 to $173.

We are starting relatively small in DIS as we want to leave plenty of room to scale into the position over time. We expect the markets will remain volatile over the next few weeks and we are still not ready to get overly aggressive just yet.

We'll publish additional thoughts around Disney and our broader thesis in the coming days and on Thursday's members-only call.

Our price target on the stock is $215.