Disney (DIS.US) shares are losing nearly 8% today after a report that disappointed investors. The reason for the declines is the streaming platform's poor performance and slower sales.
- Disney's profits fell for the third consecutive quarter by 13% year-on-year to $0.93 per share. Revenues rose 13.3% to $21.82 billion amid slower sales growthin Q1;
- Nearly $7.78 billion in revenue came from the parks, experiences and products segment. In 2022 in the same quarter, Disney reported $6.65 billion. The growth rate of 17% y/y is far outpacing inflation;
- According to management, the company is still on track to save at least $5.5 billion in a massive restructuring that includes splitting into three segments and cutting 7,000 jobs.
The results came in roughly in line with analysts' expectations from FactSet but investors focused on the company's projected growth rate in the coming quarters and lower than expected subscriptions in Disney+.
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- Combined Disney+, Hulu and ESPN+ subscribers came in below forecasts by nearly 7 million subscribers, rising to 231.3 million from 205.5 million in Q1 2022 and down 1.4% q/q. Wall Street had predicted that the company's subscribers would grow to 238.88 million;
- Within the streaming segment, Disney reported a quarterly operating loss of $659 million, down 26% from the same period last year. The company related this to better results from Disney+ and ESPN+ offset by weakness from Hulu. P
- Before the end of the year, Disney intends to merge Hulu and Disney+ into one app. The entertainment giant has indicated that the ad-free Disney+ subscription option will see a price increase later this year.
The streaming business is seeing some slowdown but noteworthy is the fact that the loss it generates is narrower. A key threat to all Disney segments could be the recession. A slowing economy and weaker labor market could significantly affect entertainment spending (including at Disney parks) and potentially - the streaming business as well. Recessionary concerns are a significant backdrop to the company's stock declines.
Disney shares (DIS.US), D1 interval. The company's shares have settled below the key averages SMA100 and SMA200, as well as the 71.6 Fibo retracement of the March 2020 upward wave. In a situation of extremes, the stock may look for final support at the level of $76,- the level of bottom pandemic sell-off. Source: xStation5
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