Disney (DIS) Stock Rises over 2% as Earnings beat Expectations, Disney+ Subscriptions Tops 28M

Updated on Feb 5, 2020 at 11:09 am UTC by Teuta Franjkovic · 3 min read
Photo: Pxfuel
Photo: Pxfuel

Disney has revealed the first earnings report since the launch of its new streaming service Disney+. Disney CEO Bob Iger said the service has exceeded their greatest expectations. DIS stock price has increased.

The Walt Disney Company said on Tuesday its revenue for the first quarter of the fiscal year 2020 stood at $20.86 billion. It means that these figures demonstrate a 36% growth in comparison with the same period a year ago.

In the first quarter since launching its streaming platform, the company noted that Disney+ got 28.6 million subscribers in the three-month period. Market experts hadn’t expected such results. Let’s not forget that just in a couple of days after the launch the platform had 10 million users. Diluted earnings per share dropped 37% year on year to $1.17 and net income fell 23% to $2.13 billion. Meanwhile, adjusted EPS were down 17% to $1.53 but still came in above expectations.

Disney + as the Best Performer

Commenting in the results, CEO Bob Iger stated:

“We had a strong first quarter, highlighted by the launch of Disney+, which has exceeded even our greatest expectations. Thanks to our incredible collection of brands, outstanding content from our creative engines and state-of-the-art technology, we believe our direct-to-consumer services, including Disney+, ESPN+ and Hulu, position us well for continued growth in today’s dynamic media environment.”

Disney shares rallied 2.22% in after-hours trading on better-than-expected results. However, at the moment of writing, they are slightly down (-0.41%) and their price stands at $144.14.

JPMorgan analyst Alexia Quadrani stated previously that she sees 20 million Disney+ subscribers in Q1 while rating Disney stock at overweight.

Possible Operating Loss of $800M

Be it as it may, Disney’s streaming investments and its Fox integration are seen weighing on the bottom line. In Q1, Walt Disney estimates the direct-to-consumer segment will post an operating loss of $800 million. It anticipates profitability for Disney+, Hulu and ESPN+ in 2023-2024.

However, that everything isn’t so nice and dandy proves the latest reports about Disney’s chance of suffering losses of $175 million because of the closure of its Shanghai and Hong Kong theme parks amid the coronavirus outbreak.

The company’s chief financial officer, Christine McCarthy said:

“The current closure is taking place during the quarter in which we typically see strong attendance and occupancy levels due to the timing of the Chinese New Year holiday.”

She added that the company anticipates an effect of $135 million on second-quarter operating income from the Shanghai theme park and about $140 million from the closure of the Hong Kong park.

According to McCarthy, the company’s exact losses will depend on the longevity of the park being closed and how fast they can resume operations as normal.

The impact of the January closures of the Hong Kong and Shanghai Disneyland parks was not reflected in Disney’s fiscal first-quarter earnings report.

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Teuta Franjkovic
Author: Teuta Franjkovic

Experienced creative professional focusing on financial and political analysis, editing daily newspapers and news sites, economical and political journalism, consulting, PR and Marketing. Teuta’s passion is to create new opportunities and bring people together.

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