Impact on earnings and revenue forecasts
The Rosen Law Firm’s COPPA probe adds a new, non‑operational head‑wind to Disney’s already‑crowded earnings horizon. Even if the investigation does not culminate in a material judgment, Disney will have to absorb legal‑defense costs, potential settlements or retroactive refunds, and the expense of tightening its data‑collection practices across YouTube, Disney+, and other digital properties. Analysts have already begun to price a modest “legal‑risk” drag into Q4 and FY 2025 guidance—typically 0.5‑1 % of quarterly revenue (roughly $150‑$300 million) and a $50‑$100 million hit to net income, largely from contingent liabilities and increased compliance spend. Because Disney’s ad‑supported streaming and Disney‑Branded Television arms generate a growing share of total revenue, any restriction on targeted advertising to children could curb CPM growth rates, shaving a few basis points off projected ad‑sales growth (e.g., from 7 % to 5‑6 % YoY). In the earnings call, investors will be listening for any forward‑looking statements about “potential impact of privacy investigations” and revised cash‑flow assumptions for the next 12‑month horizon.
Market dynamics, technical outlook & trading implications
Since the story broke, DIS has slipped ~3 % on the day and now trades below its 20‑day moving average, with the 50‑day SMA still acting as a near‑term resistance line (~$106). The MACD is turning bearish, and RSI has entered the 40‑45 zone, suggesting limited upside in the short run. However, the broader media‑entertainment sector remains supported by resilient subscriber growth and a strong parks rebound, so the downside may be capped around the 200‑day SMA (~$99). Traders could consider a cautious short‑bias position—e.g., buying put spreads 5‑10 % out‑of‑the‑money, expiring after Disney’s earnings release—to capture a potential earnings miss or a revised revenue outlook. Conversely, a conditional long could be warranted if the company explicitly states that the investigation will not materially affect FY 2025 guidance; in that case, a small‑cap call spread positioned near the 20‑day EMA could profit from a rebound on a “no‑impact” narrative. Keep an eye on any SEC filings or court docket updates in the next two weeks, as those will sharpen the risk‑reward calculus before the earnings announcement.