Disney Stock Jumps on Solid Earnings. Disney+ Was a Bright Spot.

Disney Stock Jumps on Solid Earnings. Disney+ Was a Bright Spot.

Disney’s earnings exceeded expectations, driven partly by profits from ESPN+ and ongoing growth at its theme parks. However, a decline in advertising revenue had a negative impact on the overall revenue.

Disney has announced plans to persistently manage its cost structure, implementing additional cost-cutting measures of $2 billion, bringing the total target to $7.5 billion.

Following this announcement, the company’s shares experienced a more than 4% increase after the closing bell on Wednesday.

The decline in advertising revenue was mainly attributed to Disney’s ABC Network and other owned TV stations, which experienced reduced political advertising revenue during the quarter. In the summer, CEO Bob Iger mentioned that the company might be open to selling its TV assets.

On a positive note, the company gained an additional 7 million new core Disney+ subscribers compared to the previous quarter, reaching a total user base of 150.2 million, including Hotstar. Additionally, the streaming business managed to reduce its losses compared to the same period the previous year.

Wall Street had anticipated Disney to announce a total of 148.15 million subscribers for the quarter. The company highlighted the inclusion of theatrical titles like “Elemental,” “Little Mermaid,” and “Guardians of the Galaxy: Vol. 3,” along with the new Star Wars series “Ahsoka,” as significant streaming content additions during the last three months.

The company maintains its expectation that the combined streaming businesses will achieve profitability in the fiscal fourth quarter of 2024.

CEO Bob Iger stated on Wednesday, “As we look forward, there are four key building opportunities that will be central to our success: achieving significant and sustained profitability in our streaming business, building ESPN into the preeminent digital sports platform, improving the output and economics of our film studios, and turbocharging growth in our parks and experiences business.”

Disney Stock Jumps on Solid Earnings. Disney+ Was a Bright Spot.
(Picture by Quotes Gram)

 

The company disclosed a net income of $264 million, or 14 cents per share, for the fiscal fourth quarter ending on September 30. This is an increase from the net income of $162 million, or 9 cents per share, during the same period last year.

When excluding impairments, the company earned 82 cents per share, surpassing the Wall Street expectation of 70 cents per share.

Revenue experienced a 5% increase, reaching $21.24 billion, which fell just short of estimates. Analysts had anticipated revenue of $21.33 billion. This marks the second consecutive revenue miss for Disney and is the first instance of consecutive revenue misses since early 2018.

This quarter marks the first time Disney is implementing its new financial reporting structure, which divides the company into three segments — entertainment, sports, and experiences. The entertainment segment encompasses all of Disney’s streaming and media operations, the sports segment includes ESPN, and the experiences segment includes the company’s theme parks, hotels, cruise line, and merchandising efforts.

Disney’s experiences division witnessed a 13% increase in revenues, reaching $8.16 billion during the quarter. This growth was attributed to higher attendance and ticket prices at parks both domestically and internationally. The company noted that there are still lower hotel rates at its Florida resort, and this region is facing higher operating costs. Parks accounted for approximately 66% of the total revenue for this division.

Disney’s stock surged on strong earnings, with Disney+ standing out as a highlight. The company reported a net income of $264 million, exceeding expectations. Disney+ added 7 million subscribers, reaching a total of 150.2 million. Despite revenue falling slightly short at $21.24 billion, the positive earnings propelled the stock, experiencing a more than 4% increase. Disney’s strategic vision for sustained profitability in streaming and growth in other segments contributed to investor confidence.

  • EPS: 82 cents per share adjusted vs. 70 cents per share expected, according to LSEG, formerly known as Refinitiv
  • Revenue: $21.24 billion vs. $21.33 billion expected, according to LSEG
  • Total Disney+ subscribers: 150.2 million vs. 148.15 million expected, according to StreetAccount.

In short: Disney’s stock witnessed a significant boost following strong earnings, with Disney+ being a standout performer. The company reported a net income of $264 million, surpassing expectations. Disney+ added 7 million subscribers, totaling 150.2 million. While revenue fell slightly short at $21.24 billion, the positive earnings led to a more than 4% increase in the stock. Disney’s strategic vision for sustained profitability in streaming and growth in various segments contributed to investor confidence.