Disney Stock Falls on Missed Profits But Disney+ Beats Estimates

Disney Stock Falls on Missed Profits But Disney+ Beats Estimates

waltz disney (DIS) reported lower fourth-quarter earnings on Tuesday afternoon, ending the company’s growth streak. Entertainment giant Dow Jones’ earnings have steadily improved over the past six quarters as it recouped pandemic-related losses. Disney shares fell hours after the results. And shares of DIS have fallen about 44% over the past year.


Analysts will be watching Disney+ subscriber numbers closely after Disney lowered its 2024 guidance, introduced advertising tiers and raised the price in the third quarter.

The streaming industry is grappling with slowing subscription growth and soaring production costs for new content. In response, the House of Mouse announced that the price of the ad-free version of its streaming service would increase by 38% to $10.99 per month, starting December 8. similar to what its competitor does netflix (NFLX) has just been launched.

In August, Disney lowered its target to 215 million to 245 million Disney+ subscribers by the end of 2024, down from its February forecast of 230 million to 260 million. Still, the company expects Disney+ to be profitable within two years.

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Revenue from Disney’s theme parks jumped 70% to $7.39 billion in the fiscal third quarter, thanks to a post-pandemic rebound in travel. However, foot traffic in its resort town of Shanghai has been slow to recover as China pursues its “zero-COVID” policy strategy. And theme park sales could take another hit China implements new containment measures.

Disney’s traditional media business is exposed to negative macro trends, but a focus on sports with its ESPN and Hulu properties positions it favorably, KeyBanc analyst Brandon Nispel wrote in a late October research note. . He believes Disney’s service platform provides a competitive advantage in its ability to convert linear viewers into streaming subscribers. And despite the slowdown in park attendance, he believes Disney is resilient and providing significant cash to help fund the transition to streaming. Nispel lowered his price target on Disney shares to $143 from $154, but maintained an overweight rating.

Disney Earnings

Expectations: Disney’s earnings were expected to jump 48% to 56 cents per share while revenue rose nearly 15% to $21.3 billion.

Results: Disney’s earnings fell 18% to 30 cents a share and revenue rose 9% to $20.5 billion.

The company added 12.1 million new Disney+ subscribers during the quarter. Including Hulu and ESPN+, Disney added 14.6 million new subscribers during the fourth quarter, bringing the total to 235 million across all platforms.

For the fourth quarter, Wall Street saw Disney+ add 8.9 million Disney+ subscribers to 161 million. That would be down from the fiscal third quarter, when Disney+ added 14.4 million subscribers.

Including ESPN+ and Hulu – which have already raised prices – analysts see Disney adding 10.4 million users to 231.5 million.

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DIS action

Disney stock fell more than 6% after the market closed on Tuesday following the earnings report. He currently has a relative strength rating of 34 out of a possible 99, indicating he has underperformed his peers. However, the stock’s relative strength has improved from its June lows. DIS shares are down about 8% in the past three months and 35% so far this year.

You can follow Harrison Miller for more stock info and updates on Twitter. @IBD_Harrison


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