Following the highlights shared by Chapek, investors have taken a bearish stance on DIS shares, a trend that pushed the stock lower on Tuesday’s trading session.
American diversified multinational mass media and entertainment conglomerate Walt Disney Co (NYSE: DIS) may not see the right subscriber growth projections from its streaming subscribers in its current fourth quarter. According to Disney’s CEO Bob Chapek, the firm’s streaming service growth has ‘hit some headwinds’ as fueled by the advent of the Delta variant of the Coronavirus pandemic.
As noted by Chapek at the virtual Communacopia Conference organized by Goldman Sachs Group Inc (NYSE: GS), the company may only add “low single-digit millions” of streaming subscribers this quarter. Amongst the factors cited by Chapek for the highlighted headwinds include the suspension of the Indian Premier League which is featured on Disney’s Hotstar, the challenges “mobilizing partners” in Latin America to push Disney’s new Star+ streaming service, and production delays as fueled by the delta variant.
“We are going to see a little bit more noise than maybe the Street projects quarter to quarter,” Chapek said. “The resurgence of Covid and Delta did impact some of our productions.”
Wall Street analysts were very bullish on Walt Disney shares with Bryan Kraft, an analyst from Deutsche Bank AG (ETR: DBK) projecting a subscriber growth for Disney+ in the quarter to come in at 13 million
Chapek noted the coronavirus pandemic is not all that bad for the firm, as a deliberate attempt has been made to revamp its operational processes.
“The shutdown enabled us to re-engineer things and build the systems necessary to do that,” Chapek said. “The backbone of the whole thing is our new reservation system because it gives us the ability to – on a real-time basis – direct people, ensure that we have the right mix of guests in the park, and control the demand in ways that frankly we’ve never been able to do. That then enables all the consumer interfaces we’ve recently put in place.”
Stumped Disney Subscriber Growth: Visible Impact on DIS Stock
Following the highlights shared by Chapek, investors have taken a bearish stance on the shares of the company, a trend that pushed the stock lower on Tuesday’s trading session. DIS shares closed 4.24% down to $171.17, and the current growth movements spell a brewing recovery in the company’s shares.
However, the longer-term outlook of the firm per its projections to hit as much as 230 million to 260 million subscribers by 2024 may be threatened if growth numbers did not improve in the short term.
At present, streaming services are one of the major businesses to pull in revenue and is the major pursuit of competitors like Netflix Inc (NASDAQ: NFLX), and Amazon Prime Service. The duo of Netflix and Amazon Prime has over 200 million subscribers, compared with the 116 million for Disney+ as of August this year. The projections for 260 million subscribers will effectively push the company from its number 3 position to number 1, however, the firm will need to upturn its current outlook to attain this milestone as planned.