Disney stock surges on earnings beat, subscriber growth

Disney (DIS.US) stock launched today's session with a nearly 10% bullish price gap after the company posted solid quarterly results and provided upbeat guidance for the current quarter. 

The Disney+ streaming platform is the main competitor of Netflix (NFLX.US) and the number of its subscribers is gradually increasing. These figures are one of the most important as the growth of direct-to-consumer video services was one of the major trends during the pandemic. Companies such as the aforementioned Netflix have failed to replicate their 'covid' success at this point. Meanwhile, Disney's platform is doing very well compared to its rivals.

Thanks to the loosening of restrictions, attendance at theme parks and other Disney properties has also increased, as has consumption of the company's products. Profits from this segment of the business were $7.23 billion, more than double compared to the same quarter a year earlier. In addition, David Trainer, CEO of New Constructs, a company that provides sophisticated analytics, pointed to Disney's advantage over Netflix as a result of multiple possible ways to monetise content while Netflix is limited to just one. The company also has franchise areas from which it derives additional profits.

Below are the key metrics from the company's report compared to Bloobmerg analysts' forecasts: 

• Revenue: USD 21.82 billion expectations: USD 20.8bn.
• Adjusted EPS: USD 1.06 expectations: USD 0.61 (!!!)

The number of new Disney+ subscribers platform was 11.8 million, which also positively surprised analysts. According to the Bloomberg consensus, Disney+ subscribers increased by about 7 million on a quarterly basis. We can therefore observe a huge jump in the number of new users from 2.1 million in the same quarter last year. Disney had an impressive nearly 130 million paying subscribers at the end of 2021 and has maintained its target of 260 million subscribers by the end of 2024. 

The success of the Disney+ platform can be partly justified by the weaker condition of its competitors namely Netflix and rising consumer interest regarding the company's new offer. Some analysts expected a decline of subscribers after the lockdowns ended and stagnant growth for all stay-at-home platforms. This has also caused a sell-off in Disney's shares in recent times. However, the company has shown that it can maintain customer interest in the platform. 

Also many Wall Street analysts predict that the platform's creative innovative content, access to unique documentaries or marketing support from Star Wars characters and Marvel superheroes will effectively help fuel and sustain subscriber growth. 

According to Bloobmerg, a higher rate of Disney+ subscriptions in H2 2021, rising revenues from the theme park unit and a state-of-the-art movie studio could translate into long-term success for Disney. The company is also engaging in new trends, including the Metaverse and augmented reality called AR. It is worth mentioning that the Disney+ platform has not drastically increased fees for subscribers for the time being, despite rising inflation when part of the population is cutting back on entertainment spending.

Walt Disney (DIS.US) stock launched today's session with a bullish price gap, breaking above the major resistance zone around $147.85 which is marked with upper limit of the 1:1 structure, 50 SMA (green line) and upper boundary of the triangle formation. Currently stock is approaching resistance at $156.00 which is marked with 38.2% Fibonacci retracement of the upward wave launched in March 2020. Source: xStation5