Company / Analytics

Analytics, 09 February 2022

Walt Disney Earnings: What to Expect

Walt Disney Company reports earnings today (Wednesday) after markets close. Since September, Disney shares have fallen about 20% and 8% this year. Investors will be looking at some key figures in today’s report, including the number of subscribers to Disney+. Disney previously warned investors growth in this area may be slowing.

According to estimates, Disney will need to hit or exceed 8.5 million new subscribers, bringing the total to about 127 million by the end of 2021. That is roughly half of Disney’s 2024 goals of 230 to 260 million paid subscribers. Last quarter, Disney+ attracted only 2.1 million new subscribers, the fewest since the streaming service launched in 2019.

Disney Earnings: What to expect

Walt Disney‘s results on Wednesday will be a chance for the company to show it can deliver on the bullish thesis shared by many of its shareholders: a post-pandemic theme parks recovery that boosts earnings today, alongside streaming-subscriber growth that promises recurring profits in the future.

The past few quarters have shown slowing streaming growth and parks are still impacted by coronavirus variant waves, sending Disney’s stock falling. Wednesday is a chance to change the narrative.

Earnings Preview

Disney is expected to post December quarter earnings of 63 cents per share, nearly double last year’s tally, on revenues of $20.9 billion. Notably, Parks and Experiences sales are set to rise 77% to $6.4 billion as pandemic restrictions on attendance in major markets wane. In comparison, media and entertainment revenues are forecast to jump 14.5% to $14.5 billion.

Analysts estimate that the December quarter gains of around 8.5 million, powered by the release of new content such as Beatles, Star Wars bounty hunter Boba Fett, and the Marvel superhero Hawkeye to reignite subscriber growth. During the fiscal first quarter, Disney released “Get Back,” a documentary with previously unseen footage of The Beatles, the “Hawkeye” superhero series, and the first episode of “The Book of Boba Fett.”

Disney’s main streaming rival Netflix, added 8.28 million subscribers over its December quarter but cautioned that new additions would slow to 2.5 million over the first three months of this year amid what it called a “Covid overhang” in key overseas markets and increased competition in the streaming market. From Netflix’s earnings, analysts see Disney adding 5.8 million Disney+ sub-scribers, slightly below the consensus of 7 million, and expect 2.3 million Hulu net additions vs. consensus of 1.5 million.

Meanwhile, Disney+ is expected to register weaknesses internationally and strong Disney+ and Hulu retention despite recent price increases.

Disney’s first-quarter results will also be the first under new board chairperson Susan Arnold, a Disney veteran who has served on the board since 2007 and replaced the outgoing Bog Iger on January 1.

How did Disney shares move?

Disney shares were marked 2.1% higher in late-morning trading Wednesday to change hands at $145.60 each, a move that still leaves the stock with a six-month decline of around 18%.

Investors are likely to be laser-focused, however, on subscriber additions to the group’s Disney+ streaming service, which added only 2.1 million new users in the prior quarter and now sits some 50% shy of the company’s 2024 goal of around 240 million total customers.

Should I buy Disney shares?

The current consensus among 29 polled investment analysts is to buy stock in Walt Disney Co. This rating has held steady since January when it was unchanged from a buy rating. Meanwhile, The 25 analysts offering 12-month price forecasts for Walt Disney Co have a median target of 196.00, with a high estimate of 220.00 and a low estimate of 126.00. The median estimate represents a +35.12% increase from the last price of 145.06.

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