Disney Earnings Beat Expectations, Stock Price Rises

Disney Earnings

The Walt Disney Company (NYSE: DIS) reported its fiscal third-quarter earnings on Wednesday, August 9, 2023, beating Wall Street’s expectations on both revenue and earnings per share. The entertainment giant posted revenue of $22.49 billion, up 4.6% year-over-year, and adjusted earnings of $0.98 per share, down 10.1% year-over-year. Analysts had expected revenue of $21.82 billion and earnings of $0.93 per share.

The company attributed its strong performance to the recovery of its theme parks and consumer products segments, which were severely impacted by the COVID-19 pandemic last year. The company also saw growth in its direct-to-consumer and international segments, driven by the popularity of its streaming services, especially Disney+.

Disney’s CEO Bob Iger said in a statement that he was pleased with the results, which reflected the resilience of the company’s brands and franchises. He also said that the company was optimistic about the future, as it continued to invest in new content and experiences for its global audiences.

Disney Earnings

Disney+ surpasses 200 million subscribers worldwide

One of the highlights of Disney’s Q3 earnings report was the impressive growth of its streaming service, Disney+, which surpassed 200 million subscribers worldwide as of July 31, 2023. This was an increase of 25 million subscribers from the previous quarter, and more than double the number of subscribers from a year ago.

Disney+ launched in November 2019 and quickly became one of the leading players in the streaming market, competing with rivals such as Netflix, Amazon Prime Video, and HBO Max. The service offers a wide range of content from Disney’s iconic brands, such as Marvel, Star Wars, Pixar, and National Geographic, as well as original shows and movies exclusive to the platform.

Some of the most popular titles on Disney+ in the third quarter included Loki, Black Widow, Luca, Cruella, and The Bad Batch. The company also announced several upcoming projects for Disney+, such as Hawkeye, Ms. Marvel, Star Wars: Visions, and Encanto.

Disney’s theme parks and consumer products bounce back

Another bright spot for Disney in the third quarter was the recovery of its theme parks and consumer products segments, which were hit hard by the pandemic-related closures and restrictions last year. The company reported revenue of $4.34 billion for its parks, experiences and products segment, up 307% year-over-year, and operating income of $356 million, compared to a loss of $1.96 billion a year ago.

The company said that its domestic theme parks returned to profitability in the quarter, as they reopened with increased capacity and resumed some of their normal operations. The company also saw strong demand for its merchandise and licensing business, especially for products related to Marvel, Star Wars, and Mickey Mouse.

However, the company also faced some challenges in its international theme parks, especially in France and Hong Kong, where they had to close again due to COVID-19 outbreaks. The company also said that it was closely monitoring the situation in China and Japan, where it operates Shanghai Disneyland and Tokyo Disney Resort.

Disney faces headwinds in media and entertainment segment

Despite its overall positive results, Disney also faced some headwinds in its media and entertainment segment, which includes its cable networks, broadcast television, studio entertainment, and content distribution businesses. The company reported revenue of $12.68 billion for this segment, down 4% year-over-year, and operating income of $2.02 billion, down 20% year-over-year.

The company said that the decline in revenue was mainly due to lower advertising revenue from its cable networks and broadcast television businesses, as well as lower theatrical revenue from its studio entertainment business. The company also said that the decline in operating income was largely due to higher programming and production costs from its content distribution business.

The company faced some challenges in releasing its movies in theaters amid the pandemic uncertainty and changing consumer preferences. The company experimented with different release strategies for some of its movies, such as offering them on Disney+ with an additional fee (Premier Access) or releasing them simultaneously on Disney+ and theaters (day-and-date). However, these strategies also sparked some controversies and lawsuits from some of its talent partners.

Disney stock price rises after earnings report

Disney’s stock price rose by more than 5% in after-hours trading on Wednesday after it announced its Q3 earnings report. The stock closed at $86.83 per share on Wednesday before the earnings release, and reached $91.50 per share at one point in after-hours trading.

Analysts were generally positive about Disney’s Q3 results, praising its streaming growth and theme parks recovery. Some analysts also raised their price targets for Disney’s stock based on their bullish outlook for the company’s future prospects.

However, some analysts also cautioned that Disney still faced some uncertainties and risks in the near term, such as the impact of the COVID-19 variants, the competitive pressure from other streaming services, and the legal disputes with some of its talent partners.

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