Disney Strengthens on Streaming & ProfitNov 09, 2023
Disney+ keeps ripping pages out of the Netflix playbook
Thanks to a solid rise in Diseny+ members and profit numbers, investors are back to buying Diseny stock after a positive earnings call. The company still has a long way to go.
Disney just barely missed expectations by posting $21.24 billion in revenue for the quarter. However, they managed to generate a massive $0.82 EPS from that revenue, which far outpaced expectations. Disney's profits came from an expanded cost-cutting initiative, while Disney also managed to add 7 million subscribers to Disney+, way more than expected. More importantly, the majority of new domestic subscribers are opting for the ad-supported tier on Disney+, which can help boost profits down the line.
A LOT MORE WORK LEFT
The lion's share of revenue growth came from Disney's parks and other experiences, which rose 13% on the quarter. The real blemish on Disney's numbers came from a flat sports segment that is still a heavy cost center. With Bob Iger under pressure to make transformational changes at Disney and rumors spreading about his willingness to potentially sell ESPN, investors are wondering if separating from the sports segment is one main way Disney is about to streamline things.
WHY IT MATTERS
Disney has been in the wilderness for the past year while the rest of the market has pushed back toward all time highs. This earnings report is a strong sign things are turning around at Disney. With the company gearing up to take full control of Hulu and potentially sell ESPN, things are looking great.
Despite expanding cost-cutting initiatives by over $2 billion, Disney is still finding high-impact ways to expand like adding more cruise ships across the next 3 years. The House of Mouse is still on shaky ground, but investors are starting to really like this direction. Disney stock rose over 4% in early trading.